Bitcoin Futures Spread Signals Heightened Speculation, Potential Market Top

The spread between front-month and next-month bitcoin futures contracts can indicate speculation levels and impending market tops. A $1,000+ spread has marked previous bitcoin bull market peaks.

Recently, the spread between CME bitcoin futures contracts widened beyond $1,000, signaling heightened speculation and potentially cautions for bitcoin bulls.

A wider futures spread, like the recent one, has preceded major bitcoin price peaks and ensuing corrections in late February 2021 and mid-October 2021.

The bitcoin futures curve typically slopes upward, with longer-dated contracts trading at a premium - but an excessively wide spread signals irrational speculation.

Deribit's bitcoin futures term structure can also provide clues about speculation levels among crypto-native traders.