Bitcoin (BTC) Futures Spread Contracts Sharply as Trump's Bitcoin Strategy Fails to Ignite New Buying

The bullish momentum in the Bitcoin (BTC) market, fueled by Donald Trump's victory in the November 5 U.S. presidential elections, has now fully dissipated.

The bullish momentum in the Bitcoin (BTC) market, fueled by Donald Trump’s victory in the November 5 U.S. presidential elections, has now fully dissipated. A key market indicator tied to the CME Bitcoin futures has reversed its gains, signaling a shift in sentiment.

Crucial Indicator Contracts Sharply

A crucial indicator, the spread between the “continuous” next-month and front-month standard BTC futures trading on CME, has narrowed considerably. This spread reached a high of $1,705 on December 17 but has since dropped to just $495—the lowest level since November 5—according to data from TradingView.

This sharp contraction suggests that the optimism following Trump’s election has faded, leading to a reassessment of future price expectations from traders, explained Thomas Erdösi, Head of Product at CF Benchmarks.

“The narrowing spread between front-month and next-month CME Bitcoin futures could suggest traders are tempering their price expectations,” Erdösi told CoinDesk.

The market is adjusting to a broader macroeconomic reality rather than the initial belief that a pro-crypto President in the White House would be a significant bullish catalyst.

Market Moves Beyond Trump’s Crypto Narrative

Following Trump’s election, the Bitcoin market surged on the expectation that his administration would be favorable to the digital asset industry. However, this optimism seems to have been fully priced in. Traders and investors are now shifting their focus back to macroeconomic factors. These include inflation expectations, geopolitical uncertainty, and the broader risk sentiment in financial markets.

Erdösi highlighted that the recent drop in futures premiums indicates a market-wide recalibration:

“What we can see is that the front contract basis has repriced lower substantially since the beginning of March, signaling moderating near-term expectations that the primary catalyst for the recent rally—the election of President Trump—has been fully priced in.”

This realignment is evident in broader market trends. Since early February, Bitcoin has declined by nearly 20%, whereas the Nasdaq Composite Index (Nasdaq:IXIC), home to tech-heavy stocks, has dropped by 8%. The losses stem from a variety of factors. These include Trump’s proposed tariffs, rising geopolitical tensions, and concerns over economic growth and inflation.

Trump’s Strategic Bitcoin Reserve Fails to Ignite Optimism

Another major factor weighing on sentiment is the lack of fresh Bitcoin purchases in Trump’s newly announced strategic digital asset reserve plan. While the announcement initially generated excitement, market participants were disappointed to learn that the plan does not involve new Bitcoin acquisitions.

Last week, Trump signed an executive order establishing a strategic Bitcoin reserve, to be composed of BTC seized in enforcement actions. However, investors had been hoping for a more aggressive stance, such as active Bitcoin purchases to strengthen the reserve.

“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,” noted Ian Balina, founder and CEO of Token Metrics.

The lack of new buying pressure from the U.S. government means that any expected upward momentum from this policy shift failed to materialize. As a result, traders have adjusted their positions, contributing to the contraction in futures premiums.

Bitcoin Futures Still in Contango, Signaling Stability

Despite the narrowing spread between next-month and front-month CME futures, the overall futures curve remains in contango. In financial markets, contango occurs when longer-dated futures contracts trade at a premium to near-term contracts. This typically reflects expectations of rising prices over time.

Erdösi pointed out that positive perpetual funding rates and a futures basis still in contango suggest that the recent decline is driven more by unleveraged spot selling rather than a broad market meltdown.

“The fact that perpetual funding rates remain positive and the futures basis is still in contango suggests the recent move is largely driven by unlevered spot longs being squeezed, rather than broader market contagion,” he noted.

This means that, while Bitcoin’s short-term price action appears weak, the overall market structure remains relatively stable. The persistence of contango suggests that traders still anticipate higher prices in the long run, albeit at a more tempered pace than during the post-election euphoria.