Bitcoin's futures basis increases after last week's softer US inflation print

Recent underlying buying activity in the bitcoin market is pushing prices up, with traders willing to pay a premium for buying bitcoin in the future, suggesting they expect the price to rise, analysts say.

"We see fundamental orderflow driving the market higher, with the bitcoin three-month annualized basis having shot above 10% over the weekend, and perpetual funding rates are on the rise, showing that the market is building positive sentiment," Zerocap analysts said in a Monday markets report. 

The Zerocap report's observations align with those from Velo Data charts , which show that since last Wednesday's release of softer U.S. Consumer Price Index (CPI) data for April, bitcoin’s basis rate has increased, now sitting in the 9-12% range.

The bitcoin three-month annualized basis, a measure of how much more expensive futures contracts are compared to the current price, has risen on derivatives exchanges such as Deribit , showing an increase to 11.4%. Binance is now at 10.47%, and OKX has risen to 9.68%. All these rates have posted a significant increase since the release of April's U.S. inflation on Wednesday, May 15.

QCP Capital analysts also pointed to a post-CPI rally in the cryptocurrency market. "Bitcoin has been trading in a range-bound above $66,000. Last Friday, we observed another positive inflow in ETF data, with GBTC recording net inflows," the analysts added.

Bullish macro sentiment continues

Bitcoin has held mostly above $66,000 since the release of cooler U.S. CPI data. The lower inflation data for April seems to have given wider markets an excuse to bid up, with all three major U.S. equity indexes hitting all-time highs last week.

Softer inflation decreases the chances, however slightly, of interest rates staying higher for longer. Lower interest rates reduce the cost of money and increase the willingness of investors to buy riskier assets such as cryptocurrencies. 

The buoyant market sentiment has permeated into this week's trading sentiment, with wider markets continuing the post-CPI risk-on moves they performed in the latter half of last week.

Major European and UK equity indices were red in morning trading. In London, the FTSE 100 posted a 5.97-point increase to 8,426.23, a gain of 0.071%. The regional Stoxx 600 index traded up 0.22% in Europe to 524.1o. In Tokyo, the Nikkei 225 increased by 0.73% to 39,069.68, while Australia's SP/ASX 200 increased by 0.63% to 7,863.70. South Korea's Kospi also increased by 0.64% to 2,742.14. U.S. stock futures were up, with the NYSE Composite increasing by 0.39% in pre-market trading.

Low economic growth still a threat

However, according to Zerocap analysts, there is still the threat of underlying inflation spikes combined with low economic growth. "This is a risky situation for the U.S. Federal Reserve and other Central Banks, but for now markets seem to be winding up for a move higher," the analysts added.

Zerocap also said that its analysts have disclosed they may hold interests in the assets referred to in this week's report.

On Monday, bitcoin traded flat at $67,029, at 8:34 a.m. ET., according to The Block's Prices Page . The  GM 30 Index , representing a selection of the top 30 cryptocurrencies, has increased by 0.18% to 135.66 in the past 24 hours.