Bloomberg: Wall Street Institutions Exiting Bitcoin ‘Cash and Carry’ Arbitrage

BlockBeats News, January 21st, according to Bloomberg, a key arbitrage trade in the cryptocurrency derivatives market is unraveling. A Wall Street institution was previously using a "cash-and-carry trade" strategy to capture the spread by buying physical Bitcoin and selling futures. However, due to a large influx of funds, the spread has rapidly narrowed, with the annualized return decreasing from about 17% a year ago to about 4.7% currently, barely enough to cover the cost of funds.

Market participants pointed out that the era of nearly risk-free high returns may have come to an end, and traders are now turning to more complex strategies in the decentralized market. CME Group stated that institutional investors are diversifying from Bitcoin to other tokens like Ethereum.