Is there still a chance for Bitcoin arbitrage trading? Institutional returns have dropped from 17% to 4.7%, shifting towards new strategies.

Question

【BlockBeats】A profitable strategy on Wall Street is becoming ineffective. The classic “buy spot Bitcoin and sell futures to arbitrage” approach, which once generated significant profits, has now been severely squeezed.

Data speaks for itself — the annualized return has dropped from 17% a year ago to 4.7% today. While this number looks decent, for institutional investors it’s essentially a loss: a 4.7% return can barely cover the cost of capital, let alone provide risk compensation.

Why is this happening? The answer is straightforward: too much money has flooded into the market. Large inflows of capital have caused the spread between spot and futures prices to narrow, marking the end of an era of near-risk-free high returns.

Traders are already taking action. Since the old strategies no longer work, they are turning to more complex and secretive trading tactics — those diverse strategies in decentralized markets. Moreover, many institutional investors are shifting from a sole focus on Bitcoin to diversified portfolios, with Ethereum and other mainstream tokens gaining more attention.

CME Group’s observations also confirm this trend: institutions are gradually diversifying risk, and the dominance of Bitcoin is beginning to loosen.

ImpermanentSage · Accepted Answer

17% down to 4.7%, this arbitrage really cooled off quickly. Major players are quietly turning to play with DeFi tricks.

HodlTheDoor · Answer

17% down to 4.7%, this is the result of capital game theory. The arbitrage era is really over.

Institutions are rushing in, now it's a bloody competition. Who can still reap the benefits?

It's time to look for new ways in DeFi again, always chasing the hot trends.

After this round of reshuffling, only the big fish will survive.

The disappearance of risk-free arbitrage indicates that the market has matured, but it also means fewer retail investors.

MoonBoi42 · Answer

17% drops to 4.7%, this is the result of capital inflow trying to eliminate arbitrage

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Another former gold mine has been exhausted, now it's DeFi's turn with those wild strategies

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Institutions are getting anxious, arbitrage is completely dead... shifting to DeFi to look for opportunities

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After all that effort, the returns are only this much, might as well do dollar-cost averaging, no wonder they can't sit still

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Is the market mature because the spread has been squeezed to this level? Or is there too much money...

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It seems we need to follow the institutions' lead; decentralized options might still have opportunities

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From 17% to 4.7%, this trend clearly shows too many latecomers, a classic arbitrage ending

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So, is arbitrage now just a trap for retail investors? The institutions have long since left

PerpetualLonger · Answer

17% drops to 4.7%? Bro, this isn't arbitrage, it's being trapped.

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Another new trick to cut leeks, and still decentralizing? Same old套路.

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Hey, the institutions have all run away, retail investors are still bottom fishing and adding positions. Isn't that normal?

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Oh my, can't even play risk-free arbitrage anymore. Can I still break even with my full position?

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Where's the promised golden age? Am I the one who took the fall, huh?

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Breaking through, breaking through, about to break again. Recharging faith...

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Too much money coming in? Then it’s not my small retail turn. I'm still waiting for that last bottom-fishing opportunity.

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Trying a new gameplay? Forget it, let's just hold onto the spot holdings. Anyway, we're all losing money.

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4.7% can't cover costs? Then what about my costs? Asking just reveals negative returns.

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This is called market maturity. I'll just pretend I didn't see it and keep adding to my positions.

ExpectationFarmer · Answer

17% drops to 4.7%, this arbitrage opportunity indeed doesn't look attractive anymore, institutions also have to get competitive

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Wall Street's arbitrage dream is shattered, in simple terms, there are too many retail investors blocking the way

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Wait, are they turning to DeFi for new tricks? That’s really a game of blood and tears

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The spot-futures spread is gone, indicating whether the market has matured or has been drained by vampires

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4.7% can't cover costs? How can institutions survive, what's the next step—mining or something else

GhostWalletSleuth · Answer

Fell from 17% to 4.7%, this arbitrage game is really over... institutions are starting to relax and shift to DeFi.

LayoffMiner · Answer

17% drops to 4.7%, this is the price of excess market liquidity, big players are all bottom fishing...

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Arbitrage opportunities have been squeezed out, old institutions should be crying, they need to turn to those flashy DeFi tricks

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Really, now even arbitrage isn't attractive anymore, it feels like the simple ways to make money in the crypto world have all been played out

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Is this what you call a mature market? I think it's just more retail investors getting squeezed, institutions are starting to compete internally, haha

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4.7% can't cover costs... then I, as a retail investor, buying spot directly would just be tortured to death

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Decentralized new gameplay risks are even greater, institutions are starting to bet their lives on it

Is there still a chance for Bitcoin arbitrage trading? Institutional returns have dropped from 17% to 4.7%, shifting towards new strategies.

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