The Death of the Funding Rate Trade

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One of crypto’s most popular strategies — arbitraging spot and futures markets — has become overcrowded. BitMEX reported funding rates falling to around 4%, a level so low it effectively killed the once-lucrative funding rate trade. For many traders, even U.S. Treasury bills began to outperform crypto yield strategies.

As returns compressed, the risk-reward balance flipped. What once felt like a low-effort yield machine turned into capital-intensive exposure with diminishing upside. The shift underscored a broader reality: crypto markets are maturing, and inefficiencies that once fueled profits are disappearing fast.

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funding rates at 4% is when you know the easy money era is actually over