Basis Trade at Index Close (BTIC) Bitcoin Futures - YouTube

btic bitcoin futures the benefits of trading  futures presented by ninjatrader btec means  

the basis trade at index close this allows market  participants to trade futures at a fixed spread  

to the reference price of a known benchmark index  how does btic work btec orders and transactions  

have their own unique tickers providing market  participants price discovery and transparency  

on the spread or difference between  the price of the futures contract  

and the underlying index throughout the trading  day for cryptocurrencies the value of the spread  

or basis depends on the future's implied financing  rate the time left to the contract maturity  

and perceived volatility among other factors  the basis can either be negative or positive  

once the official reference rate is published  the resultant futures of the b-tick transaction  

are cleared at the price equal to the reference  rate plus the agreed-upon b-tick trade price  

b-tech transactions completed by 4 pm london  time will use that trades dates reference  

rate to calculate the corresponding futures price  while those btec transactions completed after 4 pm  

london time will be against the next trade dates  reference rate additionally eligible contract  

participants may negotiate v-tick block trades  directly with another counterparty and submit the  

trade for clearing example at 9 00 a.m eastern  time a bitcoin focused fund manager receives  

an inflow of 5 million which needs to be allocated  to the benchmark cme cf bitcoin reference rate brr  

for that day with bitcoin futures trading at 60  000 per bitcoin the trader calculates that the  

fair value of the spread between bitcoin futures  and the brr is plus 100 per bitcoin she submits  

in order to buy 25 bitcoin futures contract  via btic symbol btb at that spread of plus 100  

based on that day's bitcoin reference rate at  the same time a trader on a crypto lending desk  

concludes he could save money by replacing  his short physical bitcoin position with cme  

bitcoin futures he calculates that he needs  to sell those features at a basis of plus  

100 per bitcoin or higher he sees the fund  manager's bid on the order book and hits it  

the btic trade is executed having sold  the futures via btic the crypto lending  

firm can then purchase 5 million worth of the  bitcoin in the otc spot market against the brr  

for that day to transpose his short physical  bitcoin position to futures all aligned against  

the same daily benchmark reference rate the btec  trade is complete the fund manager was able to  

efficiently gain exposure to bitcoin's price  while the crypto lending firm was able to shift  

their bitcoin exposure from the physical  market to more capital efficient futures  

shortly after 4 p.m london time the official brr  level of 60 500 is published the trade is now  

subtle the fund manager buys 25 bitcoin futures  contracts at a price of 60 600 which is a plus  

100 basis to the brr level and the crypto lending  desk sells them at the same price this illustrates  

how some crypto market participants may use  btic and how the mechanism can provide traders  

the ability to optimize their holdings between  bitcoin futures and physical bitcoin so that's  

how btic works the basis trade at index close  thank you for watching the benefits of futures