Bitcoin, the leading cryptocurrency, has recently seen its price surge past $41,000 for the first time since April 2022, sparking a renewed interest in market-neutral trading strategies. These strategies, particularly the bitcoin cash and carry arbitrage, or the basis trade, are now offering an annualized return of at least 10%, according to data from Deribit. This strategy involves taking a long position in the spot market and simultaneously selling futures when they trade at a premium, allowing traders to collect a fixed return as the premium converges with the spot price at the futures contract's expiry.
Currently, futures contracts are trading at an annualized premium of 8% to 12%, indicating a robust market sentiment. Crypto quant researcher Samneet Chepal noted the resurgence of the cash-carry basis trade, which previously stood out in the 2020/2021 bull market. With the anticipation of spot-based exchange-traded funds (ETFs) in the U.S. and a rise in futures premium, experts predict even higher returns in the near future. This bullish trend is attributed to a range of factors, including optimism for pending ETF decisions, the resolution of Binance’s legal matters, geopolitical tensions, and increasing institutional engagement, as stated by Luuk Strijers of Deribit.
Disclaimer: Please note that the information provided in this article is based on the referenced research articles. It is essential to conduct further research and analysis before making any investment decisions. The cryptocurrency market is highly volatile, and investors should exercise caution and consult with financial professionals before engaging in cryptocurrency trading or investment activities.