Inflows can be misleading. Watch the full picture — Spot, Derivatives, and Funding — to understand true market dynamics.
#Bitcoin #BTC #CryptoEducation #Arbitrage #ETF #MarketInsights #BinanceAcademy #Write2Earn
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Why Massive Inflows Aren’t Pumping Bitcoin — The Truth About Cash and Carry Arbitrage
Billions are flowing into Bitcoin ETFs. Spot volume is hitting records. But the price? Barely moving. What’s going on?
The answer lies in a quiet, powerful strategy: Cash and Carry Arbitrage.
Here’s how it works:
🔸 In bullish markets, Futures prices are higher than Spot prices — a condition known as Contango.
Big players exploit this by executing two simultaneous trades:
1. Buy 1 BTC on Spot at 50,000
2. Short 1 BTC on Futures at51,000
✅ This locks in a risk-free $1,000 profit. As expiry nears, Spot and Futures prices converge. They close both positions — capturing the spread regardless of market direction.
So what’s the result?
- Spot buying boosts volume and ETF inflows ✅
- But Futures shorting adds equal downward pressure ❌
- Net effect: Neutral — price stays flat.
🔍 This explains why massive inflows ≠ price explosion. It’s not real organic demand — it’s a hedged arbitrage loop.
Key takeaways:
- High Open Interest doesn’t always mean bullish momentum
- Positive Funding + Flat Price = Arbitrage, not trend
- Wait for real directional demand, not just headlines
Conclusion:
