Arbitrage Strategy
What Are Funding Rates? In crypto trading, funding rates are payments made between traders in perpetual futures contracts (which have no expiry date) to keep contract prices close to actual market prices. If the rate is positive, long (buy) traders pay short (sell) traders, and if it's negative, short traders pay long traders.
How Traders Profit from Funding Rates
Traders can use a strategy called arbitrage to earn from funding rates. With a positive funding rate, a trader shorts perpetual futures and buys the same amount in the spot market, earning payments from their short position. With a negative rate, they buy perpetual futures and short-sell an equivalent amount in the spot market, earning from their long position.Easily see your ROI by adjusting the slider.
Calculations
Management Fees
$3,000
Your Estimated Earnings Per Quarter
$5,625
Your Estimated Earnings Per Annual
USD $22,500
Example in Practice
Imagine Bitcoin's spot price is $30,000, while the perpetual futures price is $30,200 with a 0.05% positive funding rate every 8 hours. By shorting 1 BTC in perpetual futures and buying 1 BTC in the spot market, the trader earns 0.05% of the futures price every 8 hours (around $15.10) regardless of how BTC's price moves.Benefits and Risks
This strategy can create steady income with lower exposure to price changes, but it's not without risks. Price shifts during trade setup, fluctuating funding rates, transaction fees, and funds being locked up in trades can impact profitability.Our benefits for you:
Ease of Access:
Investors can easily compare different funds in one place, making it simpler to find opportunities that match their investment goals, risk tolerance, and time horizon.
Professional Management:
Funds listed in a marketplace are typically managed by experienced professionals, giving investors access to expert strategies without the need for constant monitoring or deep financial knowledge.
Flexibility and Customization:
A marketplace offers a variety of fund types, allowing investors to pick and choose based on their preferred investment strategies, such as growth, income, or balanced funds.
Transparency:
Investment fund marketplaces provide clear and detailed information about each fund's performance, fees, and holdings, allowing investors to make informed decisions with full visibility into their investment choices.
Diversification:
choose from a wide range of funds, spreads risk across various asset classes, sectors, and markets.
Cost Efficiency:
Some marketplaces offer competitive pricing structures, reducing the fees or costs associated with investing in funds compared to individual management of assets.
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