Cash-and-carry in crypto — the basis trade for the perpetual era

In 2017-2020, the cleanest yield trade in crypto was holding spot and shorting a quarterly future. The basis annualized to 20-40% in good cycles. By 2024 that trade was effectively dead — perpetuals stole all the volume from dated futures. But the carry didn't disappear; it migrated. Today's "cash-and-carry" is a perpetual delta-neutral position collecting funding, and the structural mechanics are nearly identical.

Classic cash-and-carry, briefly

The trade is one of the oldest in finance: borrow cash, buy spot, sell forward. If the forward sells at a premium to spot — contango — you lock in the premium minus your borrow cost. The trade is risk-free as long as you can deliver into the forward at expiry.

In commodities, this is how oil traders monetize storage. In bonds, it underpins repo. In crypto in 2018-2021, BitMEX quarterly contracts on BTC routinely traded 5-15% above spot, annualizing to 20-60% basis APY. Arb desks ran billions through it.

What killed dated-basis in crypto

Three structural shifts:

1. Volume migrated to perpetuals. By 2023, 90%+ of crypto futures volume traded on perpetual contracts. Quarterly futures became thin, illiquid, with wide spreads. The trade's edge shrunk because there was less directional pressure on the dated side.
2. Institutional capital arrived. CME futures became the institutional venue. Pro desks compress basis to 3-8% APY almost continuously — barely worth the operational overhead for retail.
3. Borrow rates rose. Real-world dollar rates went from zero to 4-5% post-2022. The cost-of-carry side of the equation got expensive. A 6% basis is no edge if you're paying 4% to borrow the cash leg.

The perpetual replacement

Funding-rate arbitrage on perpetuals is the same trade dressed differently. Instead of capturing a fixed premium-to-spot at a forward expiry, you collect a continuously-paid premium every 8 hours (or every hour on Hyperliquid).

The key advantage of the perpetual version: you can exit instantly. In dated basis, your capital is locked until expiry. If basis collapses on day 5 of a 90-day trade, you sit through it (or pay to unwind early at a loss). In perp funding, you close both legs as soon as the rate decays below your hurdle. Capital rotation makes the trade compoundable in a way classical basis never was.

Why this trade still pays in 2026

The structural reason funding rates exist is the same reason they keep paying: retail demand is asymmetric. In bull markets, retail piles into perpetual longs with 10-50× leverage. The funding rate has to climb high enough to dissuade more longs from entering. In bear markets, the asymmetry inverts — shorts crowd in, funding goes negative. Either way, professional capital takes the other side and gets paid.

Could this go away? Only if retail leveraged speculation disappears from crypto — which would require a fundamental shift in market structure. As long as 18-year-olds open Bybit accounts and YOLO into 50× memecoin longs, funding will spike, and somebody will be on the other side collecting.

What it actually looks like in practice

A working playbook for a $10-50K capital pool:

1. Scan across exchanges every 5-15 minutes (a screener does this; we run a free one at /funding-rates/).
2. Filter to pairs with $50M+ daily volume to avoid liquidity traps. Throw out anything where APY is only high because the pair is illiquid.
3. Pair up spot + perpetual on same coin, ideally same exchange (lower transfer friction). When that's not possible, split between two exchanges and accept the deposit/withdraw delay risk.
4. Enter both legs within a few seconds of each other, equal notional. Use limit orders to avoid taker fees on the spot leg if possible.
5. Monitor daily. Set a hurdle rate (typically 15% APY annualized). When the pair drops below it, exit both legs.
6. Rotate capital into the next pair on the screener.

This is genuinely a process trade — not a "set and forget" position. The rotation is where the alpha compounds. A trader rotating capital weekly through top-quartile setups can sustain 15-30% net APY across a full year. A trader who deploys to one pair and forgets it averages 5-8% — barely beating the cost of capital.

The bottom line

Cash-and-carry isn't dead in crypto. It moved venues. The math is the same, the margins are tighter on majors, and the highest-APY opportunities now live in places dated-basis traders never went — Hyperliquid alts, Bybit memecoins, Bitget mid-caps. The traders who adapted are still doing fine.