The once-lucrative cash-and-carry arbitrage trade in Bitcoin is collapsing, forcing major Wall Street institutions to pull back. The strategy, which involved buying Bitcoin on the spot market while simultaneously selling futures contracts to lock in a price difference, is now barely profitable due to compressed yields, tighter spreads, and diminished interest from U.S. institutional players.
A key indicator of this shift is the open interest in Bitcoin futures on the Chicago Mercantile Exchange (CME), which has fallen below that of Binance for the first time since 2023. CME had been the preferred venue for this trade, especially after the approval of spot Bitcoin ETFs in early 2024. However, the influx of capital crowded the trade, eroding returns. Annualized yields for the one-month strategy have crashed from around 17% a year ago to approximately 4.7%–5% today, barely exceeding the ~3.5% yield of one-year U.S. Treasuries.
CME's Bitcoin futures open interest has plummeted from a peak of over $21 billion to just under $10 billion. In contrast, Binance has held steady at around $11 billion. This reflects a tactical reset rather than a full exit from crypto, as U.S. hedge funds and large accounts step back from this specific trade following Bitcoin's price peak in October 2025.
The market is shifting towards perpetual futures contracts ("perps"), which have no expiry and settle continuously. Binance dominates this space. While CME attempted to compete in 2025 by launching smaller and longer-term contracts (some with maturities up to five years), its volumes still do not compare.
According to a note from CME Group, 2025 marked a turning point. As regulatory clarity improved, large investors began looking beyond Bitcoin to assets like Ether, XRP, and Solana. The exchange noted that its average daily notional open interest for Ether surged from about $1 billion in 2024 to nearly $5 billion in 2025.
Market participants attribute the arbitrage decline to increased market efficiency. The proliferation of tools like ETFs and direct exchange access has narrowed price gaps between venues. "There’s a self-balancing effect," said Le Shi from market maker Auros. As traders seek the cheapest place to trade, spreads close, making cash-and-carry trades unviable. This has pushed firms like 319 Capital to abandon the simple strategy in favor of more complex ones.
