Funding rate arbitrage is a popular tactic in the perpetual futures market on crypto exchanges. The strategy focuses on exploiting the gaps in funding rates across different exchanges to make a profit from the interest rate differences.
The bot employs two strategies to help traders earn funding fees by opening a perpetual futures position and hedging it with an opposite position in the spot market. This system keeps the contract price aligned with the spot price of the underlying asset. When funding rates are positive, long positions pay short positions. Conversely, when rates are negative, short positions pay long positions.
Binance now offers nearly 120,000 active trading strategies on its Trading Bots Marketplace. Popular automated trading tools available include Grid Trading for Spot and Futures, Rebalancing Bot, Auto-Invest, and Dollar-Cost Averaging (DCA).
The newly launched bot is also Binance’s first to automate a delta-neutral spot and futures arbitrage strategy. It simplifies the process by automating both the spot and perpetual futures trades simultaneously, eliminating the need for users to manually manage two separate trades.
Separately, Binance is set to launch its Spot Copy Trading feature to all eligible users. This will let users follow and automatically replicate the trades of the platform’s top traders. To use Binance’s spot copy trading feature, users must meet certain minimum portfolio asset management requirements.
Copy trading was originally introduced by the social trading platform eToro and has since been picked up by other major cryptocurrency platforms.
Binance first introduced spot copy trading for “Lead Traders” in late April. The exchange claims that the feature has proven successful, with over 70% of active Lead Traders achieving positive P&L despite a volatile market in April that saw overall crypto market capitalization drop by 11%.
Source: Cryptocurrency - investing.com
