A recent study from the Bank for International Settlements (BIS) sheds light on crypto "carry" or the differences between spot and futures prices in Bitcoin and Ethereum and its effect on crypto investment markets. The paper found that small investors often have a large role in crypto market fluctuations as they were found to take leveraged futures positions “when there are strong price trends and heightened media attention”. The paper concluded that the carry size of up to 60% is mainly caused by the convenience yield of holding futures and the "scarcity of arbitrage capital" - meaning that the investors chasing the trend and holding onto the assets limit the availability of capital to buy. This then contributes to crypto market's “severe price run-ups and market crashes”. The paper is keen to note that the findings of the study can not be applied to every crypto asset or imply a directional relationship, but offers insight into market behavior for better informed trading decisions.



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