The Bitcoin carry trade now pays more than US government debt. On August 7, annualized Chicago Mercantile Exchange (CME) Bitcoin (BTC) futures carry reached 5.69% to 7.89%, well above the 4.19% two-year Treasury yield recorded the same day.
The flip lands at an awkward moment for bonds. Long-term Treasury yields sit at their highest levels since 2007, and forecasters keep raising their estimates.
Bond Forecasters Keep Chasing Yields Higher
A Reuters poll sees calmer bonds ahead. The median forecast puts the 10-year yield at 4.50% in three months and 4.34% in a year. The two-year is seen sliding to 3.80%.
However, the same survey carries a warning. Eighteen of 22 strategists said the 10-year is more likely to overshoot those forecasts than undershoot them.
Their track record explains the caution. In March, the same poll series saw the 10-year near 4.25% a year out. Five months later, it trades above 4.70%.
Meanwhile, the long end is already breaking ranks. The 30-year yield touched 5.27% on Tuesday, its highest since 2007. BeInCrypto covered the 30-year Treasury yield closing at a 2007 high in late July.
Real yields are doing the damage, not inflation bets. In other words, investors want more compensation for US deficits and heavy debt sales.
Bitcoin Carry Trade Outpaces the Two-Year Treasury
The trade itself is simple. A desk buys spot Bitcoin and shorts a CME futures contract against it. The gap between the two prices becomes the return, collected as they converge at expiry. Think of it as crypto’s version of a bond coupon.
On August 7, that gap beat the government. Measured against the $64,880 CME New York spot benchmark, the August contract settled at $65,175. That works out to a 7.89% annualized return.
September paid 6.25% and December 5.69%. Official Treasury data put the two-year at 4.19% that day, and 4.25% by August 10.
Positioning suggests the shift has teeth. CME data showed hedge funds turned bullish on Bitcoin this month for the first time in years.
Historically, those funds ran net short futures, the classic footprint of carry desks hedging spot and ETF holdings.
ETF Money Flows In, but the Fine Print Matters
Fresh cash is arriving on the spot side too. Farside data shows US spot Bitcoin ETFs pulled in $865 million in the week ended August 7, with every session positive. BlackRock’s IBIT took roughly $694 million of that, about 80%.
Still, the flows cannot show motive. No public dataset links an ETF purchase to a futures hedge. Commodity Futures Trading Commission (CFTC) reports only aggregate positions by trader type.
The gross spread also flatters the trade. Financing, margin, and fees all take a cut before a desk keeps anything. A Bank for International Settlements study found crypto carry can top 40% a year during booms, yet margin frictions stop arbitrage capital from fully closing the gap.
Bitcoin trades near $63,930, up 0.3% over the past day. Therefore, the number to watch is the net spread after costs, read beside CME open interest and ETF flows. Wednesday’s July CPI print could move both sides of that ledger.
The post Bitcoin Carry Trade Tops Treasury Yields at 7.89%: Will Wall Street Rotate? appeared first on BeInCrypto.
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