“Funding fee arbitrage,” which is a way to make a profit in Bitcoin (BTC) thanks to the recently increased funding fees, offers an annual return of close to 10%.
Bitcoin price has become more volatile, especially as spot Bitcoin exchange-traded fund (ETF) news flares up. This high mobility comes with altcoins This led to serious price volatility, either upward or downward.
On-chain analysis platform Velo Data, By revealing the increase in funding rates, investorsfunding fee arbitrageHe emphasized that the chances of getting the chance are increasing.
Funding fee arbitrage is making a comeback as the gap between Bitcoin-related perpetual futures and spot price widens. It became fashionable.
Cryptocurrency exchange thanks to arbitrage based on funding rates, according to data Including Binance annually in major stock exchanges, including It offers a huge profit opportunity of 10%. Experts say that serious price movements occur between futures markets and spot markets. widening the price difference He stated that while paving the way, an opportunity may arise for investors.
What is funding fee arbitrage?
Funding fee arbitrage is achieved by trading in futures transactions for a cryptocurrency whose funding fee reaches excessive rates of minus or plus, and vice versa, by purchasing from the spot market. For example A cryptocurrency named X funding rate positive for a while Let’s assume it is. In addition, this funding rate is sometimes up to “+2” Let’s assume it comes out.
When the funding rate in a trading pair is positive long The number of investors taking directional positions short It seems that it is higher than those who open directional transactions.
In this case, as a matter of strategy, you should choose the opposite direction of the majority’s position. short for x You take a directional position, that is, you make a futures transaction in the direction that it will fall. In this way comes from funding every 4 or 8 hours you get. But in case X rises, extra from spot buy x Precautions for possible damage you get it.