TL;DR:

Bitcoin booms 9.5% to $64,000, its biggest jump in months, fueled by Wall Street's growing interest in Bitcoin ETFs and attractive arbitrage opportunities.

In a remarkable turn of events, Bitcoin (BTC) experienced its most significant single-day surge since October, skyrocketing by 9.5% on Wednesday, according to data from TradingView.

This surge propelled prices to $64,000 across various exchanges, marking the highest point since November 2021. Market analysts attribute this parabolic movement to the enthusiastic adoption of spot-based Bitcoin exchange-traded funds (ETFs) by Wall Street investors.
 

Wall Street's Embrace Fuels Bitcoin's Rally

The recent surge in Bitcoin prices follows a notable increase in institutional interest, primarily driven by the introduction of spot-based Bitcoin ETFs.

Analysts believe that these ETFs have brought about a surge in 'passive demand,' with investors viewing Bitcoin more as a store of value rather than a volatile tradable asset.

This shift in perception has significantly contributed to the recent bullish sentiment surrounding Bitcoin, with the CoinDesk 20 Index rising over 10% this week alone.

Market-Neutral Strategy Yields Triple Returns

Amidst the fervor surrounding Bitcoin's surge, market-neutral traders have found a lucrative opportunity in the form of cash and carry arbitrage.

This strategy, aimed at capitalizing on price discrepancies between spot and futures markets, has yielded three times more returns than the yield on the 10-year U.S. Treasury note, commonly referred to as the risk-free rate.

Cash and carry arbitrage involves exploiting the price difference between Bitcoin spot and futures markets. Arbitrageurs simultaneously hold a long position in the spot market and a short position in futures contracts when futures trade at a premium to spot prices.

As futures contracts approach expiry, the premium diminishes, leading to convergence with spot prices upon settlement. This convergence results in a relatively risk-free return for arbitrageurs.

Blockchain analytics firm Glassnode reports that the bitcoin cash and carry strategy, particularly involving three-month futures contracts, has delivered impressive returns exceeding 14%.

This figure dwarfs the yield of the 10-year Treasury note, currently standing at 4.27%, as well as the 1-year Treasury yield of 5%.The allure of such significantly higher returns could potentially attract more capital into the crypto market, further bolstering Bitcoin's upward trajectory.

Analysts Foresee Continued Rally 

Market analysts remain optimistic about Bitcoin's future trajectory, with many forecasting continued bullish momentum in the coming months.

According to analysts at crypto exchange Bitfinex, conservative price objectives range from $100,000 to $120,000 by the fourth quarter of 2024, with the cycle peak anticipated sometime in 2025 in terms of total crypto market capitalization.

Technical analysis expert Peter Brandt recently suggested a potential peak of $200,000 for Bitcoin by September 2025.

These optimistic projections are expected to instill confidence in directional traders, while the allure of market-neutral strategies like cash and carry arbitrage promises attractive returns for non-directional traders.

Bitcoin's recent surge, fueled by institutional adoption and the introduction of spot-based ETFs, has propelled prices to new heights, with significant implications for both directional and non-directional traders.

As Bitcoin continues to gain traction among traditional investors, the allure of market-neutral strategies offering triple the returns of conventional investments may further drive capital inflows into the crypto market, signaling a promising outlook for Bitcoin's future performance.