According to Refinitiv, the bullish momentum that was triggered by Donald Trump’s victory in the November 5th Presidential elections seems to have completely evaporated. This is evident from the spread between the “continuous” next month and front-month standard BTC futures trading on the global derivatives giant, CME bitcoin (BTC) futures.
The continuous contract, which is a calculated representation of a series of successively expiring futures contracts that allows for a continuous historical data series for analysis, has decreased to $495. This is the lowest it has been since November 5th, and is a stark contrast to the peak of $1,705 on December 17th, as per TradingView data. This drastic decline signals that the ‘Trump Effect’ on bitcoin has been entirely undone, pointing to a weakened bullish sentiment in the market.
Head of product at CF Benchmarks, Thomas Erdösi, shared with CoinDesk: “The narrowing spread between front-month and next-month CME Bitcoin futures could suggest traders are tempering their price expectations.”
The vanishing of the ‘Trump Effect’ likely implies that the market is moving past the belief that a crypto-friendly President in the White House bodes well for the industry. Instead, macro correlations have once again taken the driver’s seat.
Erdösi added, “What we can notice is that the front contract basis has repriced significantly lower since the start of March, indicating moderating near term expectations that the primary catalyst for the recent rally—the election of President Trump—has been fully priced in.”
Concurrently, both BTC and Nasdaq, Wall Street’s tech-centric index, have plummeted 20% and 8%, respectively, since early February. This is due to a multitude of factors such as geopolitical uncertainty, Trump tariffs, and the outlook for inflation and economic growth.
Furthermore, the bitcoin market had to deal with disappointment over the absence of new acquisitions in Trump’s strategic digital asset reserve plan. Last week, Trump issued an executive order directing the establishment of a strategic reserve that incorporates BTC confiscated in enforcement actions.
“The announcement about the Strategic Bitcoin Reserve is not what the market was hoping for. Many expected the Reserve to buy new Bitcoin, but instead, they stated they would not sell any of their existing Bitcoin or confiscated Bitcoin. While this is a positive move, it caused a sharp decline in Bitcoin’s price,” said Ian Balina, founder and CEO of Token Metrics, in an email to CoinDesk.
Despite the narrowing spread between next month and front month CME futures contracts, the entire curve remains in contango, where futures contracts with longer maturities trade at a premium to those with shorter maturities. This is typical in all markets due to reasons like storage, financing, insurance costs, and expectations of rising prices over the coming weeks or months.
“The fact that perpetual funding rates remain positive and the futures basis is still in contango suggests the recent move is driven by unlevered spot longs being squeezed, rather than broader market contagion,” Erdösi observed.
