Topic: 2023-12-04 CoinDesk - BTC Market-Neutral Bets Offer 10% Return as BTC Tops $41K (Read 43 times)

Bitcoin Market-Neutral Bets Offer 10% Return as BTC Tops $41K, Analysts Say

- The market-neutral bitcoin "basis" trade offers an annualized double-digit return as futures premium rise above 10%.

- The strategy could become more attractive with the launch of spot ETFs next year, one analyst said.

Bitcoin (BTC), the leading cryptocurrency by market value, has surged past $41,000 for the first time since April 2022.

While the rally is undoubtedly good news for directional traders, market-neutral traders who intend to make steady returns irrespective of price trends need not feel left behind, as return on such strategies is steadily climbing.

The bitcoin cash and carry arbitrage or the so-called basis trade, a market-neutral strategy seeking to profit from mispricings in the spot and futures market, now offers at least 10% annualized return, data from crypto derivatives exchange Deribit show. The basis is the difference between prices for futures and the spot price of the underlying asset.

The strategy involves taking a long position in the spot market and simultaneously selling futures when futures are trading at a premium to the spot price. Setting opposing positions helps traders collect a fixed return as the premium evaporates over time and converges with the spot price on the futures contract’s expiry date, irrespective of the spot market trend.

https://www.coindesk.com/markets/2023/12/04/bitcoin-market-neutral-bets-offer-10-return-as-btc-tops-41k-analysts-say