Cryptocurrency markets are unpredictable, but hedging with futures contracts provides an opportunity to earn consistent, low-risk returns. Platforms like Deribit and BitMEX allow traders to lock in guaranteed profits by capitalizing on the premium difference between spot prices and futures contracts.
At different times, futures markets can offer APRs exceeding 20%, while at other times, rates may be lower. At the moment of writing, the APR available is 8%, but historical data shows fluctuations between 8-20%. This example illustrates how a 10% APR trade can be structured.
Understanding the Cash-and-Carry Strategy
This strategy involves:
1️⃣ Buying crypto in the spot market (BTC or ETH).
2️⃣ Selling a futures contract at a higher price (locking in a premium).
3️⃣ Holding the position until the futures contract expires.
4️⃣ Settling the trade at expiry to capture the premium as profit.
Since futures usually trade at a premium due to market demand and funding rates, you can use this difference to generate risk-free returns.
Real Example: Earning 10% APR with BTC & ETH Futures (Feb 28, 2025)
🔹 Current Market Prices on Deribit/BitMEX (Feb 28, 2025):
- BTC Spot Price: $90,000
- BTC Futures (Expiring May 30, 2025 – 3-month contract): $92,250
- BTC Futures (Expiring Aug 30, 2025 – 6-month contract): $94,500
- ETH Spot Price: $2,300
- ETH Futures (Expiring May 30, 2025 – 3-month contract): $2,357
- ETH Futures (Expiring Aug 30, 2025 – 6-month contract): $2,415
📊 Futures Premiums:
- BTC (3-Month Premium): ($92,250 – $90,000) = $2,250 per BTC
- BTC (6-Month Premium): ($94,500 – $90,000) = $4,500 per BTC
- ETH (3-Month Premium): ($2,357 – $2,300) = $57 per ETH
- ETH (6-Month Premium): ($2,415 – $2,300) = $115 per ETH
💡 Annualized Return Calculation (APR)
| Asset | Holding Period | Profit | APR Calculation | Annualized Return |
|---|---|---|---|---|
| BTC | 3 months | $2,250 | ($2,250 / $90,000) × 4 | 10% APR |
| BTC | 6 months | $4,500 | ($4,500 / $90,000) × 2 | 10% APR |
| ETH | 3 months | $57 | ($57 / $2,300) × 4 | 9.9% APR |
| ETH | 6 months | $115 | ($115 / $2,300) × 2 | 10% APR |
🎯 Conclusion:
- Both 3-month and 6-month BTC futures currently offer a 10% APR.
- ETH futures provide a similar return of ~10% APR.
- APR fluctuates over time, sometimes exceeding 20% and sometimes lower.
Step-by-Step Execution of the Trade
🔹 Executing the BTC Trade (6-month expiry, 10% APR)
1️⃣ Buy 1 BTC at $90,000 in the spot market.
2️⃣ Sell 1 BTC futures contract (Aug 30, 2025) at $94,500.
3️⃣ Wait until expiration (Aug 30, 2025).
4️⃣ Settle the futures contract (spot and futures price converge).
5️⃣ Profit: $4,500 per BTC (locked-in, risk-free).
🔹 Executing the ETH Trade (3-month expiry, 9.9% APR)
1️⃣ Buy 10 ETH at $2,300 each (total cost: $23,000).
2️⃣ Sell 10 ETH futures contracts (May 30, 2025) at $2,357 each.
3️⃣ Hold until contract expiry (May 30, 2025).
4️⃣ Settle the trade, capturing a profit of $570 total.
✅ No price exposure risk – The profit is locked in regardless of BTC or ETH price changes.
Risk Considerations
🔴 1. Exchange Risk: Stick to trusted platforms like Deribit, BitMEX, Binance.
🔴 2. Liquidity Risk: Ensure futures contracts have enough trading volume.
🔴 3. Market Fluctuations: APR may be higher or lower over time.
🔴 4. Fees & Funding Costs: Factor in trading fees when calculating net returns.
🚀 Risk Mitigation: Keep your positions fully hedged to minimize volatility exposure.
Final Thoughts: Passive Income with Crypto Hedging
Hedging through crypto futures trading is a low-risk, high-reward strategy that provides predictable returns. While APR varies, current futures premiums offer approximately 10% annualized returns.
✅ APR fluctuates—historically reaching 20% or higher, while sometimes dropping below 10%.
✅ BTC & ETH futures currently offer stable 10% APR opportunities.
✅ This strategy is repeatable, working in both bull and bear markets.
💡 Want to start earning? Explore futures trading on Deribit or BitMEX today and lock in your risk-free returns!