Following Donald Trump’s victory in the US Presidential elections, the optimism observed in the Bitcoin market quickly dissipated. The drop in the CME Bitcoin futures spread to $495 indicates that investors are no longer seeing the support they expected from a crypto-friendly president reflected in the pricing.

The optimism in the Bitcoin market after Donald Trump’s victory in the US Presidential elections largely disappeared with developments reflected in the futures trading data. Changes seen in the CME Bitcoin futures curve indicate that the expectation of benefits to the sector from a crypto-friendly president has been pushed aside, revealing that macroeconomic dynamics now play a determining role. BITCOIN FUTURES SPREAD HITS POST-ELECTION LOW

One of the key indicators measuring investor sensitivity in the Bitcoin market, the CME Bitcoin futures spread, dropped to its lowest level since the elections in November. The price difference between continuous futures for the upcoming and following month, which had risen to $1,705 on December 17, dropped to $495 according to the latest data. This data provided by TradingView suggests that the market’s optimism for Trump’s presidency has been completely erased.

Thomas Erdösi, Product Director at CF Benchmarks, stated to CoinDesk, “The narrowing spread between the futures for the upcoming and following month on CME Bitcoin futures could indicate diminished price expectations from investors.” Erdösi noted that the market has fully priced in Trump’s election victory, and the optimism regarding the impact of a crypto-friendly president on the market has weakened. He emphasized a significant decline in Bitcoin futures since the beginning of March, indicating “the pricing of President Trump’s election and the softening of short-term expectations.” MACROECONOMIC FACTORS RESURFACING

The increasing correlation between Bitcoin and traditional financial markets demonstrates that the crypto market has become more sensitive to macroeconomic developments. Recent drops of 8% in the Nasdaq index and 20% in Bitcoin reveal the market’s response to factors such as geopolitical uncertainties, trade policy uncertainties under Trump, inflation, and economic growth expectations in the US.

The digital asset reserve policy of the Trump administration added to the disappointment in the market. Last week, Trump signed an executive order for the creation of a strategic reserve containing seized Bitcoins under sanctions. However, the anticipation for new Bitcoin purchases by this reserve did not materialize. Ian Balina, founder and CEO of Token Metrics, expressed that the announcement of the Strategic Bitcoin Reserve did not meet market expectations. While many investors were expecting new Bitcoin purchases, it was announced that existing Bitcoins would not be sold or seized. Balina noted, “This was a positive development, yet the market did not price it in, leading to a sharp sell-off.” CME FUTURES CURVE STILL IN CONTANGO

Despite the contraction of the futures spread, the CME Bitcoin futures curve is still displaying a contango trend. Contango indicates that long-term futures contracts are trading at a premium compared to short-term contracts. This suggests that investors are expecting prices to rise in the future; however, recent market movements may have been due to a squeeze of leverage long positions in the spot market. Erdösi commented, “The positive trend in continuous funding rates and the futures curve still being in contango show that the recent market movement is more likely due to the suppression of leverage spot long positions rather than a broader collapse.” Recent developments indicate that the Bitcoin market has largely left behind the post-Trump optimism and is now focusing on broader macroeconomic variables.