Binance, the dominant blockchain ecosystem powering the world’s largest cryptocurrency exchange in terms of trading volume, has unveiled the Funding Rate Arbitrage Bot and has fully launched Spot Copy Trading to all eligible customers.
Currently, Binance’s Trading Bots Marketplace offers around 120,000 active trading strategies, and the platform is continuously enhancing its range of automated trading tools for customers. Among the popular automated trading bots are Grid Trading for Spot and Futures, Rebalancing Bot, Auto-Invest, and Dollar-Cost Averaging (DCA).
The introduction of Binance’s first trading bot, the Funding Rate Arbitrage Bot, eliminates the need for users to manually execute separate spot and perpetual futures trades. This bot automates a delta-neutral spot and futures arbitrage approach by initiating a perpetual futures position and hedging it with an opposing position of the same size on the spot market. The aim is to enable traders to profit from funding costs.
By inputting their strategy parameters, users can let the Arbitrage Bot automatically execute both spot and futures trades simultaneously, thereby saving them the hassle of managing two trade orders on separate interfaces. This is the key advantage of the Arbitrage Bot compared to manual implementation of an arbitrage strategy. Monitoring the success of the Arbitrage Bot strategies is also convenient as they are individually managed in the user’s trading bot wallet.
Funding fees, which are unique to cryptocurrency markets, serve to maintain price alignment between spot and perpetual futures. In a bullish trend with a positive funding rate, long traders pay the funding fee to short traders. Conversely, in a bearish trend with a negative funding rate, short traders pay the funding fee to long traders.
The Arbitrage Bot allows users to implement two types of strategies: Positive Carry and Reverse Carry. The Positive Carry strategy involves purchasing assets on the spot market and shorting the corresponding perpetual futures contract to benefit from a positive funding rate. On the other hand, the Reverse Carry strategy involves selling assets on the spot market and investing in perpetual contracts to profit from a negative funding rate.
The Arbitrage Bot can be accessed on the Binance website, and starting from May 30, it will also be available on the Binance App.
Rohit Wad, Chief Technology Officer of Binance, commented on the developments, stating that Binance has responded to customer demand by launching Spot Copy Trading. Initially introduced to Lead Traders in late April, over 70% of active Lead Traders have reported positive profits and losses (P&L) despite the market’s volatility, which saw an 11% decline in the total cryptocurrency market size in April.
Having successfully rolled out Spot Copy Trading to Lead Traders, Binance will extend access to all eligible users from May 15. This feature allows users to follow Lead Traders and copy their portfolios, providing a broader range of trading opportunities and potential profitability.
