#SpotVSFuturesStrategy Spot vs Futures Strategy is an approach used in cryptocurrency and other asset trading that involves exploiting the differences between the spot market (immediate exchange) and the futures market (forward contracts). Below you will find an explanation and examples of strategies that can be associated with this hashtag.
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🔍 What is the spot vs futures market?
Spot Market: You buy assets (e.g., BTC) and you own them. You trade "here and now".
Futures Market: You enter a contract for the future price of an asset without physically owning it. You can bet on an increase (long) or a decrease (short).
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📈 Popular Spot vs Futures Strategies:
1. Cash-and-Carry Arbitrage
You buy an asset in the spot market.
At the same time, you sell a futures contract on the same asset (short).
Profit = the difference between the futures and spot price minus fees.
✅ Used in contango (futures more expensive than spot).
🧠 Goal: exploit price differences without exchange rate risk.
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2. Reverse Cash-and-Carry
You sell an asset in the spot market (or borrow and sell).
You buy a futures contract (long).
Used in backwardation (futures cheaper than spot).
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3. Hedging
You have spot assets (e.g., BTC), but you fear a decline.
You open a short position on futures.
Decrease in BTC prices = profit from the short covers the loss on spot.
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4. Funding Rate Arbitrage
Perpetual futures have a funding rate (a mechanism that keeps the futures price close to spot).
You can profit from a positive funding rate:
Long spot
Short futures
You earn from funding rate payouts.
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🛠️ Technical Requirements:
Access to an exchange with both spot and futures (e.g., Binance, OKX, Bybit).
Capital in both markets.
Low transaction fees.
Algorithms or alerts to track price differences.
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🧠 Example of Application:
> BTC price on spot: $60,000
BTC futures price (3-month): $63,000
Spread: $3,000
You open spot long + futures short. You hold until futures expiration. You close both positions. Profit = $3,000 (minus fees).
