Hello fellow monkeys,
The crypto lure is finally getting the better of me: I've been reading about the fact that Bitcoin futures (both quartery deliverables and perpetual) typically trade higher than spot as holding Bitcoin is a pain (security risks mostly).
This has driven some to engage in your typical contango arb: long the spot, short the future, wait for the price gap to fall to 0 as time passes, profit, post pics of your rented lambo on Instagram, rinse & repeat.
Having 0 experience and a deep suspicion towards anything crypto, I'm looking for monkeys with some knowledge on how to set up this trade and avoid the pitfalls that could incinerate my savings. Any kind soul on this forum willing to help?
Disclosure: I am based in continental Europe where Binance still operates (for now), I have no views on crypto as an asset class but it seems to be a promising field for some good ol' arbitrage
following
Not entirely sure the trade works right now with recent selloff... I think the gap may be closed? But when the price is going up again this trade is free money apparently. If you put your profits into yield farming and leverage slightly using protocols like AAVE you can get even more free money.
Isn't there some risk of margin call when the price increases unless you can borrow against the increased value of your spot bitcoin?
Yeah you need to be careful and don’t overleverage. But if you keep it at conservative levels, it’s literally free money.
Good ol' question then. If it's free money, why isn't everyone doing it?
Because there’s some risk involved and it takes some basic technical knowledge.
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