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When Bitcoin’s (BTC) price fell 10% to $ 29,150 on Jan. 27, something unusual happened with the Chicago Mercantile Exchange (CME) BTC futures contracts.

When the price fell, these CME Bitcoin futures traded at a 1% discount against Coinbase, indicating a disorder between the two markets.

Immediately, traders suggested that futures contracts, which were due to expire in 48 hours, were responsible for the price drop. Before rushing to quick conclusions, keep in mind that every short sale needs a (tall) buyer of the same size.

There can therefore be no open interest imbalance. Additionally, futures contracts can be extended (rolled over) for a future date as long as their holder has enough margin to cover them.

Rather than assuming that a single factor influenced the price of Bitcoin, it is better to analyze the intraday movements of both markets (CME futures and spot exchanges).

The futures premium (or basis) measures the premium of longer-term futures contracts relative to the current spot level (regular markets). Anytime this indicator fades or goes negative, it’s an alarming red flag. This situation is also called backwardation and indicates a bearish sentiment.

CME futures premium. Source: TradingView

These fixed month contracts usually trade at a small premium, indicating that sellers are asking for more money to hold settlement longer. In healthy markets, futures should be traded at a premium of 5% to 15% on an annual basis, also known as contango.

The imbalance between each market may have been caused by long-term contract liquidations driven by traders with insufficient margin, tight order books or intense price action ahead of the remaining spot markets.

Therefore, this data in itself does not reveal cause or effect. Moreover, a similar movement took place on January 18.

CME Futures Premium vs Coinbase BTC USD. Source: TradingView

Note how the CME BTC premium plunged to a negative 1% despite no apparent volatility occurring on the BTC spot exchanges. It is safe to say that this event was unrelated to the price action of the market.

By analyzing the January 27 crash in more detail, it is possible to determine whether the negative CME premium preceded the market volatility.

CME Futures Premium vs Coinbase BTC USD. Source: TradingView

The data levels above show that the CME Bitcoin futures premium is much later in the day instead of acting as a leading indicator. While Bitcoin tested the USD 31,800 resistance, the selling pressure at CME continued, causing the temporary price differential.

There could be multiple reasons behind this effect, so comparing intraday price across multiple exchanges can explain whether CME led the downturn.

CME BTC Futures vs. Coinbase, Binance Perp, OKEx weekly. Source: TradingView

In summary, there is no evidence of price expectations from the CME Bitcoin futures. These markets are incredibly brokered and will typically move together. In addition, the usual premium could face some temporary differences similar to January 18, regardless of Bitcoin’s volatility at the time.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the view of Cointelegraph. Every investment and every trade move carries risks. You should do your own research when making a decision.