There are several methods for stable arbitrage in crypto contracts:
1. Cryptocurrency - Contract Hedging: Buy in the spot market while shorting in perpetual contracts, profiting from funding rate differences and price convergence deviations. For example, on Binance, following their 2025 rules, funding rates settle every 8 hours, with a maximum U-based contract rate of ±0.075%. However, be cautious of sudden funding rate changes and the risk of liquidation.
2. Inter-Period Arbitrage: Go long on the current contract while shorting the next contract, profiting from the distortion and repair of the term structure. However, be wary of basis risk caused by delivery time differences.
3. Triangle Arbitrage: Profit through cyclical trading of three cryptocurrencies, such as BTC/ETH/USDT, by exploiting the instantaneous price imbalance between trading pairs. However, there are issues of slippage and network delays.
4. Funding Rate Arbitrage: This is a market-neutral arbitrage strategy. Perpetual contracts have no expiration date, and prices are anchored to the funding rate and spot prices. When contracts are trading at a premium, longs pay shorts; and vice versa when trading at a discount. You can buy spot when the funding rate is positive and short the contract.
In addition, there are some related time strategies:
1. Funding Rate Arbitrage Timing: Funding rates typically settle every 8 hours, and under extreme market conditions, the settlement frequency is even higher. You can open a position a few seconds before settlement when the funding rate is positive and meets opening conditions (e.g., price difference rate greater than 0.05%, funding rate greater than 0), and immediately close the position after settlement.
2. Inter-Period Contract Arbitrage Timing: Focus on the price spread fluctuations when the main contract rolls over, using statistical arbitrage models to identify historical quantile opportunities, and profit from the changes in price spreads of different contract expiration times.
3. Time Arbitrage: Utilize the differences in market prices across different time periods for arbitrage, based on short-term price fluctuations due to supply and demand imbalances, market sentiment, etc., buying at low prices and selling at high prices, or vice versa.
It is important to note that arbitrage carries risks; proper risk management should be implemented while monitoring market trends and regulatory developments.
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