With cryptocurrencies surpassing the USD 2trn market capitalization milestone, the upward price momentum has drawn a fair share of cheerleaders and detractors into the conversation surrounding Bitcoin ’s future.
There is still a significant spread between Bitcoin futures prices and spot prices, which have opened up a uniquely profitable trading opportunity with very limited risk.
Before the days of a booming futures market, the main arbitrage opportunity in the crypto space was between exchanges.
One historical example in Bitcoin was when traders would buy coins at a cheaper price on one exchange, move them to another exchange to be sold for a higher price, and then repeat the process.
Fortunately, since exchange fees now make this form of arbitrage difficult, if not impossible to implement, a relatively risk-free opportunity has arisen.
At the time of writing, a quick look at CME futures data for Bitcoin showed that the December 2021 contract .
Effectively, that means that traders could, for example, buy Bitcoin in the spot market at USD 57,215 and sell December 2021 Bitcoin futures for USD 60,720, capturing the USD 3,505 difference.
What this means is that every time a futures contract is more expensive than spot prices, traders can buy BTC in the spot market and sell BTC in the futures market to capture this difference, while remaining completely unexposed to bitcoin volatility.