We purchase crypto assets (Bitcoin or Ethereum) on the spot market.
Simultaneously, we sell a futures contract for the volume of the purchased crypto assets.
While this position is held, interest is paid every eight hours, and the position's value in dollars remains unchanged.
When USDT is needed back, the position is promptly sold on liquid markets, resulting in cash.
Low-Risk Arbitrage. Cash & Carry is designed to exploit the difference between the spot and futures prices, typically providing a low-risk way to earn. Since the strategy involves locking in the price differential upfront, it offers a degree of certainty in an otherwise volatile market.
Market-Neutral Strategy. This strategy is largely market-neutral, meaning it can generate returns regardless of whether the overall market is moving up or down. This makes it attractive during periods of market uncertainty.
Exploitation of Market Inefficiencies. Cash and carry trades allow traders to capitalize on pricing inefficiencies between spot and futures markets. In the relatively young and sometimes inefficient crypto markets, these opportunities can be more frequent and significant.
Yield Enhancement. Traders holding spot cryptocurrencies can potentially earn additional yield by participating in staking or lending programs, enhancing overall returns.
Improved Liquidity. More traders engaging in cash and carry strategies can improve market liquidity and help reduce price discrepancies between spot and futures markets.