Cash and Carry Trade in Crypto: Step-by-Step Guide

Learn how cash and carry arbitrage works in crypto — buy spot, short futures, lock in profit when gap closes. Step-by-step guide with real examples.

What is Cash and Carry Trade?

Cash and carry is a market-neutral strategy where you simultaneously buy an asset on the spot market and short the same asset on the futures market.

The profit comes from the price gap between spot and futures — called the basis — which converges to zero at futures expiry..

How It Works in Crypto

In crypto, cash and carry works on perpetual futures markets.

You hold a long spot position and a short perpetual futures position.

Instead of waiting for expiry, you earn funding rate payments every 8 hours when the funding rate is positive..

Step-by-Step Example

Example with $10,000 capital on ETHUSDT: 1.

Buy $10,000 ETH on Binance spot.

2.

Short $10,000 ETHUSDT perpetual futures on Bybit.

3.

Funding rate: +0.05% every 8 hours = +0.15%/day.

4.

Daily income: $10,000 x 0.15% = $15/day.

5.

Monthly income: ~$450 before fees..

Entry and Exit Rules

Enter when funding rate is above 0.03% per 8h and has been positive for at least 5 consecutive payments.

Exit when funding rate drops below 0.01% for 2 payments in a row, or when basis turns negative..

Risk Factors

Main risks: funding rate reversal, exchange risk, and liquidation risk on the futures leg.

Manage by using 2x leverage maximum and keeping margin well above maintenance level..

Is It Profitable?

At 0.05% funding rate, $10,000 capital earns ~$450/month gross.

After fees (~$20/month), net is approximately $430/month.

APR: ~52%.

Returns vary with funding rate..