BitMEX Alpha: Basis Trading with MATIC and LINK

NOTE: Nothing stated below should be considered financial advice. This is merely a suggestion for users to learn more about trading strategies. Users are always advised to do as much research as possible before executing any trade. The following is not intended to convey guaranteed returns, and BitMEX will not be held liable if a trade does not proceed as expected.

Profiting from cryptocurrencies, especially derivatives, is not always simple. Therefore, we have launched the “BitMEX Alpha” series, which aims to share trading secrets about potentially profitable opportunities on BitMEX.

This time we share basis trading opportunities for buying spot and selling perpetual futures contracts, especially on platforms including MATIC (Polygon) and LINK (Chainlink).

How does it work? The contracts discussed below have higher funding rates (long positions pay short positions every 8 hours). This means that the trader who sells the contract must receive a relatively high funding fee.

Let’s take a closer look.

Let’s take a look at the plan.

Below is a breakdown of funding rates for MATIC and LINK on BitMEX.

The rightmost column, APR (Based on Most Recent Funding Rate), shows the annual rate of return you could earn by base trading each currency.

How to seize the opportunity?

1. Buy (golong) currency through spot or exchange functions.
2. Sell ​​(short) the same amount of tokens through a perpetual contract.
3. Important Note: PleasehereTracks the funding rate of your tokens.
4. If you think the funding rate will be negative for an extended period of time, exit the trade.

For a step-by-step guide to perpetual contracts and spot trading, see this article.article“2. Swap and spot trading” in .

What is the profit potential?

Although the exact profit amount cannot be determined from these trades (as it depends on the funding rate, which changes every 8 hours), the funding rates for the contracts mentioned above are much higher than what you typically see!

This means you can earn more profit through funding fees.

What should I consider?

• These are the costs of entering and exiting two trades, including trading fees and slippage.
• There is execution risk when simultaneously trading spot contracts and perpetual contracts, especially during periods of market volatility.
• USDT (Tether) is required for spot purchases. Perpetual contracts require additional USDT as margin.
• Considering that you can trade with leverage of up to 20x for the MATICUSDT perpetual contract and up to 33x for the LINKUSDT perpetual contract, there is a risk of liquidation. If the market price rises above the liquidation price, your position may be liquidated, leaving you exposed to an unhedged spot position. If you choose to trade with high leverage, you should monitor market conditions closely and top up your wallet to meet margin requirements. Alternatively, you may choose to trade with 1x leverage to avoid liquidation risk.

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