CME Group plans to support spot Bitcoin trading soon. One analyst now says this will make holding BTC long positions cheaper.
Cryptocurrency trading has evolved from the early days of Bitcoin peer-to-peer trading to the failure of FTX.
There are retailers and institutions, all interested in making the sphere more fluid, liquid, and easy to participate in.
Of all institutions and big-money players in the United States, the CME Group is among the most active and interesting.
From enabling the first trading of Bitcoin futures in 2017 to news that they plan to launch a spot Bitcoin trading platform, it shows how fast crypto is evolving and maturing.
CME Group Plans To Launch Spot Bitcoin Trading Platform
Taking to X, Willy Woo, an on-chain analyst, noted that should the CME Group actualize its plans and launch a spot Bitcoin trading platform, taking BTC long positions would be cheaper.
Woo adds that this overview hinges on the concept of “basis trading,” which is used mostly by professional traders in the Treasury markets.
The strategy is simple: A trader borrows money to sell futures and buys an asset in the spot markets.
Profits are earned mainly by exploiting the price difference, or basis, between futures and spot prices. This basis can sometimes be as high as 20% APY.
If the CME Group launches the spot Bitcoin trading platform, this strategy will be easy to navigate, slashing costs. At the moment, Bitcoin traders have to navigate different markets to take advantage of this price difference.
Moreover, with the CME Group now in play, the increased competition in the Bitcoin spot market would further help lower borrowing rates. Subsequently, it would lower the cost of financing the “selling of futures contracts,” making long positions even more affordable.
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CME Group’s consideration of launching this platform follows the stringent United States SEC’s approval of spot Bitcoin ETFs in January. Since then, institutions, including Millenium and several banks in North America, have bought these products.
If the cost of basis trading falls, it will incentivize professional traders to engage. As such, Bitcoin, and by extension, top altcoins, will be more liquid, tapering volatility.
Currently, Bitcoin prices are firm, inching higher falling news that the United States inflation is falling.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital
