BIT: Funding rate falls below SOFR, reducing the attractiveness of bitcoin basis trading
Foresight News reports that BIT tweeted, "Unlike in 2022, during this round of Bitcoin's downward cycle, crypto hedge funds can no longer reliably earn arbitrage profits from spot-futures basis trading as they once did. This strategy typically involves buying spot and selling futures to capture the price difference between them. Previously, after deducting SOFR-based financing costs, such unleveraged strategies could achieve an annualized return of 5%–10%. However, as interest rates have risen and retail participation in futures trading has decreased, the related premium has continued to narrow."
Data also confirms this change: Currently, Bitcoin's annualized funding rate is about 2.9%, lower than SOFR's 3.7%. This means the spread between the funding rate and SOFR has turned negative since February 2026. This trend can be traced back to February 2025, when retail participation started to decline. As arbitrage returns decrease, some crypto hedge funds may choose to adopt a wait-and-see approach, while others may face redemption pressure."
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Enbridge closes CDN$ 3 billion common share offering, issues 44,735,000 shares
Danske Bank’s Realkredit Danmark opens new DKK fixed-rate mortgage covered bond issuance
ADM announces Q3 2026 dividend of R$ 0.22 per unit
Méliuz raises capital by R$ 252,129.20 via stock option exercise, issues 210,868 shares
