In the cryptocurrency derivatives market, there is a low-risk arbitrage strategy frequently used by experienced traders—spot short selling + futures long, commonly known in the industry as 'spot short and futures long'. By almost exclusively implementing spot short and futures long, they achieve about 7%+ returns each month, and it is stable every month.
This article will break down its core gameplay and profit logic.
1. Principle of spot short and futures long arbitrage
Spot short and futures long is a typical hedging arbitrage approach:
Borrowing coins to short in the spot market (spot short selling)
Going long on the same amount of perpetual contracts in the futures market
Close positions when the spot and futures price difference returns, earning the price difference and funding fees
Sources of profit mainly include:
Price difference income: Spot selling price > Future buyback price
Funding fee income: Going long on perpetual contracts during positive premiums can earn funding fees
Fee/cashback advantages: Especially for VIP users, trading fees are extremely low or even cashback
Arbitrage profit formula ≈ Price difference income + funding fee income - borrowing interest
During times of significant market fluctuations, the perpetual contract prices of popular or new coins often exceed the spot prices, with price differences reaching 2% to 10% or even higher. Once the coins are borrowed and positions are quickly established, the profits are almost locked in after the hedging is completed.
2. Core gameplay
This high yield mainly comes from resource advantages and strategic focus:
1. VIP borrowing channels
Mainstream exchanges like Binance offer VIP users higher borrowing limits and priority
VIP users can not only borrow popular coins, but also have more flexible borrowing rates and terms
Low fees or cashback, providing a larger net profit margin
2. Focus on spot short arbitrage, avoiding complex strategies
Almost purely doing 'spot short selling + futures long', not doing 'periodic' or multi-strategy mixing
Concentrate efforts on seizing high premium opportunities, with high capital efficiency
3. Core resources
Traders are familiar with platform borrowing and risk control rules
May directly collaborate with project parties to borrow coins, solving the pain point of 'not being able to borrow popular coins'
All using the team’s VIP account, self-opening accounts for retail investors are not supported, ensuring consistency in strategy execution
3. Risk control and risk points
Although spot short and futures long theoretically have lower risks, there are still several core risks:
1. ADL (Automatic Deleveraging) risk
When the contract market experiences extreme fluctuations and the insurance fund is insufficient, exchanges will forcibly reduce the positions of profitable parties
If the hedging position is subjected to ADL, it will affect profits and may cause short-term drawdowns
2. Borrowing restrictions and costs
If you can't borrow coins, you can't open a position, as the quotas for popular coins are limited
Borrowing interest and trading fees will also erode part of the profits
3. Execution and liquidity risks
When price difference opportunities arise, orders must be placed quickly to complete hedging
Need API quantitative tools and a complete risk control system
The reason for the stable monthly yield of 7% lies in:
Can borrow coins (VIP + project channel)
Strategies are simple and efficient (focusing on spot short arbitrage)
Risk control in place (divided positions, low leverage, positive funding fees)
4. Summary
Spot short and futures long arbitrage is considered a low-risk arbitrage strategy, but the threshold is not low:
Ordinary users find it difficult to borrow coins, with high fees, making it hard to replicate institutional strategies
The real core resources are borrowing ability + execution speed + risk control system
A 7% monthly return is not unbelievable; its essence is:
Seized the limited borrowing resources in the market
Using VIP accounts to reduce costs and lock in price differences
Precise timing, focusing on the coins with the most premium
If you also want to do similar arbitrage, you need to solve the two core issues of borrowing coins and execution first; otherwise, it's difficult to replicate in the long term.