One of the most reliable trades in cryptocurrencies has gone awry.

Bitcoin futures, which typically trade at a premium to the spot price, have collapsed along the curve amid a brutal selloff in the world’s largest cryptocurrency. That’s obliterated what’s known as the basis trade, in which a trader would buy Bitcoin in the spot market today and sell long-dated futures, locking in the discrepancy between the two prices.

It’s a painful watershed for one of the crypto market’s most ubiquitous plays. Hedge funds piled into the trade, which could previously reliably produce double-digit annual gains. Even better, the arbitrage was virtually risk-free, given that CME Group Inc. is the counterparty. However, the trade existed because long-dated futures were more expensive than shorter-dated ones, given that Bitcoin is inherently scarce and theoretically should rise—a structure known as contango. The breakdown of that dynamic implies that built-in bullishness has disappeared.

“That’s the very simple explanation, that contango is typically indicative of bullishness in the market and so to the extent that market participants are pessimistic, it makes sense to me that it’s broken down,” Nic Carter, founding partner at Castle Island Ventures, said by phone. “It could mean that some capital has just been structurally withdrawn from the market.”

“We have been in backwardation for the last few days—this is due to the current market turmoil in the spot market,” said Wilfred Daye, chief executive officer of Enigma Securities, which works with institutional and corporate clients to provide crypto services and bespoke liquidity solutions. “As levered futures/perps traders unwind their positions to meet margin calls, i.e. via auto-liquidation mechanisms on exchanges, the futures trade below the spot.” This could persist as long as sentiment remains negative and deleveraging trades continue, he said.

Contango and backwardation are names for curve structures that map traders’ guesses about what a given contract could be worth in the future. Contango means it’s upward sloping, while backwardation means downward.

Bitcoin on Tuesday, amid a decline that reached 10% at one point in the session, briefly wiping out its 2021 gains. The drawdown comes amid negative sentiment about its energy use, brought on largely by Tesla Inc.’s Elon Musk, as well as a clampdown from China. The coin is now trading not far from the levels it started the year—$29,000.

The basis trade’s disappearance is the latest sure-fire crypto wager to backfire. The Grayscale Bitcoin Trust (ticker GBTC) swelled to a shocking 40% premium to its underlying holdings in late December amid a rally in prices and relentless demand for crypto exposure. Institutional investors were able to capitalize on that by depositing Bitcoin with Grayscale in exchange for GBTC shares, then selling those shares at a markup after a six-month lockup period.

However, GBTC’s premium dissolved in late February, and the fund currently trades at an 11% discount to the Bitcoin it holds.

“The curve is just flat and these kinds of opportunities have gone away,” said Stephane Ouellette, chief executive and co-founder of FRNT Financial, whose firm says it offers the world’s only regulated BTC-basis product. “The futures curve is saying it has no idea where the market is going.”

This article was provided by Bloomberg News.