Institutional Traders Quietly Milk Premium from XRP Futures
A recent disclosure by Bitwise has shed light on an institutional XRP carry trade. The Bitwise Crypto Carry Fund, or USCC, held a significant amount of XRP in custody and paired it with a short position in September Coinbase XRP futures. This structure was designed to collect the premium between futures and spot prices, with the fund positioning itself to benefit from the 0.91% difference.
The data shows that on September 1, Bitwise held 10,781,438.36 XRP in custody and had a displayed futures quantity of negative 10,510,000, resulting in an implied yield of 14.57%. This means that if the position was held to maturity, it would have generated a return of 14.57% per year.
The residual risks associated with this trade are still present, including potential differences in spot and futures prices before settlement, as well as the need for custody and margin maintenance. Additionally, the cash-settlement benchmark may not align with the price available for the fund's custody inventory.