👔💬 Bloomberg: A key arbitrage strategy in the crypto derivatives market is falling apart.
The "cash-and-carry trade," where Wall Street institutions bought BTC on the spot market and sold it on the futures market to profit from price differences, saw spreads tighten sharply due to large influxes of funds.
Annual returns have fallen from approximately 17% a year ago to approximately 4.7% currently, barely covering the cost of capital. This largely reflects the strategic divestment of large US accounts, such as hedge funds.
The maturation of the market has given institutions more tools to express their directional views, resulting in narrowing spreads between exchanges, naturally compressing the arbitrage space. Market participants believe the era of near-risk-free high returns may be over.
🦄Unicorn Hype
