A quiet but significant shift is occurring in the cryptocurrency derivatives market. The cash-and-carry strategy, long considered a stable source of profit, is rapidly losing its appeal.
This arbitrage model, where institutions buy spot Bitcoin and sell futures contracts to profit from the price difference, is showing signs of being phased out due to narrowing spreads and increasing market efficiency.
One of the most concrete indicators of this change is that open positions in Bitcoin futures on the CME Group have fallen behind Binance for the first time since 2023. Following the approval of spot Bitcoin ETFs in early 2024, CME became the primary platform of choice for Wall Street analysts. The model was simple: spot Bitcoin was bought through ETFs, futures were sold on the CME, and the difference was collected.
In the months following the ETF approvals, this “delta-neutral” strategy generated double-digit annualized returns, attracting billions of dollars from funds that were uninterested in price direction and focused solely on yield. However, these same ETFs also sealed the trade’s fate: the surge in market demand rapidly eroded arbitrage margins. Today, the trade barely covers its cost of capital.
According to Amberdata data, one-month annualized yields are around 5%, the lowest in recent years. Greg Magadini, Amberdata’s director of derivatives, says that the cash-and-carry yield was around 17% at this time last year, but has fallen to 4.7% today. Considering that one-year US Treasury bonds offer a yield of approximately 3.5%, the strategy’s appeal is rapidly diminishing.
With the cash-and-carry market tightening, open interest in Bitcoin futures on the CME has fallen from a peak of over $21 billion to below $10 billion. In contrast, open interest on Binance remains relatively flat at around $11 billion. According to James Harris, CEO of digital asset management company Tesseract, this picture reflects not a mass exit from crypto, but a tactical withdrawal by hedge funds and large US accounts.
Crypto exchanges, particularly Binance, are the main hub for perpetual futures contracts with continuous settlement and margin calculations. These products generate the highest volumes in the crypto market. CME, on the other hand, introduced smaller, longer-term contracts last year, offering investors the ability to hold contracts for up to five years using spot market terms. Harris says, “CME has historically been the preferred location for institutions and cash-and-carry arbitrage; the intersection with Binance is a meaningful signal of how participation is changing,” describing it as “a tactical reset where yields are dimming and liquidity is thinning.”
*This is not investment advice.
