Rising Bitcoin Supply Absorption Precedes Halving: Surges in Perpetual Funding Rates

By: Eva Baxter

Summary

As the next Bitcoin halving approaches, there is a noticeable uptick in Bitcoin's monthly issuance absorption rate across various cohorts. In addition, an emerging trend of selling perpetual futures while buying Bitcoin in the spot market has become an appealing arbitrage strategy for traders, yielding an annual return of over 10%.

Bitcoin's current monthly issuance is 27,000 BTC, which is calculated based on 900 Bitcoins mined each day over a span of 30 days. A comprehensive analysis of various market cohorts reveals an increasing absorption of this issuance. The past month's data show certain types of participants, or 'cohorts', significantly contributing to the absorption of these coins, with smaller player categories like 'Shrimps' collecting 25,000 BTC and 'Crabs' acquiring 2,265 BTC.

At the same time, an interesting arbitrage strategy is gaining traction. This involves selling perpetual futures and simultaneously buying Bitcoin in the spot market, offering an annualized yield of over 10%. With the impending halving event, Bitcoin's monthly supply is expected to drop to 13,500 BTC. Assuming a steady demand, this supply reduction could bring about a bullish turn in the market—an event that might not yet be fully priced in.

Both these trends buttress the perception of Bitcoin's strong market position and highlight the potential opportunities for investors and traders. Investors should continue monitoring these trends to take advantage of fresh market opportunities.