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Bloomberg: Wall Street institutions are withdrawing from Bitcoin "buy and sell" arbitrage trading
BlockBeats News, January 21 — According to Bloomberg, a key arbitrage trade in the cryptocurrency derivatives market is falling apart. Wall Street institutions previously employed a “cash-and-carry trade” strategy by buying spot Bitcoin and selling futures to capture the price difference. However, due to a surge of capital inflows causing the spread to narrow sharply, the annualized return has dropped from about 17% a year ago to approximately 4.7% now, making it nearly impossible to cover funding costs.
Market participants point out that the era of near risk-free high returns may be over, and traders are shifting towards more complex strategies in decentralized markets. CME Group stated that institutional investors are diversifying from Bitcoin into other tokens such as Ethereum.