Key Insights:
- The crypto market may be unstable because it uses two different futures systems that work against each other.
- Arthur Hayes hints that monthly CME futures expiry puts pressure on Bitcoin right when rallies start.
- Perpetual futures do not expire, and Hayes believes one unified futures design might reduce sudden sell-off risks.
The crypto market has seen many sudden drops this year. Prices rise for a while, then fall fast when futures positions get hit.
Arthur Hayes, the founder of BitMEX and a well-known crypto trader, thinks he knows why this keeps happening. He says the crypto prices runs on two different futures systems that do not work well together.
One is the perpetual futures market used on crypto exchanges. The other is the futures market on the Chicago Mercantile Exchange, also called the CME. CME futures expire every month. Perpetual futures do not. Hayes says this mix is the real reason crypto prices rally keep stopping.
Crypto Market: How These Two Futures Systems Work?
Perpetual futures, or “perps,” are simple to understand. They look like normal futures but never expire.
This means traders can hold them for as long as they want. A small fee called funding keeps the price close to the spot market.
Perps work well for crypto because the crypto market runs 24 hours a day.
CME futures work differently. The CME is a large traditional exchange in the United States. It is used by banks, funds, and other big players.
CME futures have fixed expiry dates. Most CME Bitcoin futures last one or two months.
When these contracts expire, traders must close or roll their positions. This creates a rush of activity around the expiry window.
Hayes thinks this expiry cycle creates pressure on the digital assets at the wrong time. The crypto prices rally often slow down when CME futures get close to expiry.
How Monthly Expiry Adds Pressure to the Crypto Prices?
When CME contracts reach expiry, many things happen at once. Some traders close their positions, while others roll into the next month.
Some hedge on crypto exchanges. All these actions can move the crypto prices quickly.
At the same time, the perpetual market can also get stressed. If the price moves fast, traders using high leverage can get liquidated.
A liquidation means the exchange closes its position because the loss is too big. This adds more buying or selling pressure. It can turn a small move into a larger one.
The idea of Arthur Hayes suggests that this is why the crypto market often rises, slows down, and then drops.
The CME expiry window hits first. Then liquidations start in the perp market. Both combine into a stop-start pattern.
Would One Futures System Make the Crypto Market More Stable?
Arthur Hayes wants a simple fix. He wants the digital assets to use only one futures system: perpetual futures.
Perps do not expire, so they do not force traders to close positions at the same time. He says this matches crypto better because the crypto market never closes.
CME futures come from traditional markets (TradFi) that follow fixed schedules.
As per the theory, Arthur Hayes’s idea holds weight for the crypto market. A single system would remove the extra pressure from the monthly expiry.
CME brings large investors into crypto, and removing it could hurt market depth. Still, the pattern is clear.
The biggest CME activity sits in short-term contracts. When those contracts expire, the crypto prices often feel the effect.
Whether Hayes is fully right or not, his point shows a deeper issue: the crypto prices are still shaped by systems that were not built for a 24/7 market.