Funding Rate Arbitrage on Binance + Bybit: Complete Step-by-Step Guide

Complete guide to running funding rate arbitrage between Binance and Bybit — account setup, fund transfer, trade execution, and monitoring.

Why Binance + Bybit?

Binance offers the deepest spot liquidity.

Bybit has the lowest futures maker fee (0.01%) — essential for minimizing cost on the short side.

Together, they offer the best combined fee structure for funding rate arbitrage..

Binance: Create account, complete KYC, enable 2FA, activate Futures trading.

Bybit: Create account, complete KYC, enable 2FA, switch to Unified Trading Account (UTA) for best cross-margin efficiency..

Deposit USDT to both exchanges via TRC-20 (cheapest transfer, ~$1 fee).

Transfers typically clear in 5-15 minutes.

Start with equal amounts on both exchanges..

Go to CoinGlass or Bybit Funding Rate page.

Look for USDT perpetuals with: Rate > 0.05%/8h, volume > $100M/day, positive rate for 5+ consecutive payments..

Step 1: Buy ETH spot on Binance with limit order.

Step 2: Short ETHUSDT Perpetual on Bybit matching the dollar value exactly with limit order.

Step 3: Confirm both positions are open and net exposure is near zero..

Check daily: funding rate on Bybit, position sizes.

Exit condition: funding rate drops below 0.02% for 2+ payments.

Exit: Close Bybit short first, then sell ETH on Binance simultaneously..

Should I put spot on Binance or Bybit?

Binance spot + Bybit futures is the optimal combination. Binance has deeper spot liquidity; Bybit has lower futures fees.

What if ETH price moves 20% while I'm in the trade?

Your spot position gains 20% while your futures position loses 20% — they cancel out. Net P&L from price movement is ~zero.

How do I know if my position is perfectly hedged?

Both positions should have the same dollar value. If ETH price changes, your spot and futures values move equally in opposite directions.

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