Exploring Arbitrage Opportunities between the BTC Spot and Futures Market based on Funding Rates Mechanism

Abstract

Crypto-currency, in nowadays occupies a very important position in the global financial market. Due to the importance of Crypto-currency, research on it has positive and significant meanings for financial purpose. This research examined how investors arbitrage between the BTC spot and futures market based on funding rates mechanism (Binance exchange). Secondary data was collected and testified in order to examine if there is an arbitrage opportunity between BTC spot and future markets. The data analysis tested the existences of arbitrage opportunities, and arbitrage profits were much larger during BTC market crashes than normal period. On the other hand, the risk of this investing is relatively smaller.