Key Cryptocurrency Arbitrage Strategy Faces Decline

On January 21, a report from Bloomberg highlights a significant shift in the cryptocurrency derivatives market. According to BlockBeats, a crucial arbitrage strategy known as the 'cash-and-carry trade,' which involves buying spot Bitcoin and selling futures to capture the price difference, is unraveling. The influx of substantial capital has sharply narrowed the spread, reducing the annualized return from approximately 17% a year ago to about 4.7% now, barely covering the cost of funds. Market experts suggest that the era of nearly risk-free high returns may be over, prompting traders to explore more complex strategies in decentralized markets. CME Group notes that institutional investors are diversifying from Bitcoin to other tokens like Ethereum.