Market neutral is a strategy that combines a spot purchase with a short sale of equal notional on a perpetual contract to cancel market direction exposure. The reference funding rate stands at approximately 11% annualized, but drops to around 8.8% once margin requirements and execution fees on both legs are accounted for, while also fluctuating significantly with leverage demand. Four major risks persist despite the neutral positioning: basis risk, funding inversion, short leg liquidation and counterparty risk, as illustrated by the October 10, 2025 purge with $19 billion in positions liquidated in twenty-four hours. This approach suits corporate treasuries and endowment funds that cannot afford either the 70%-plus drawdowns of bitcoin or a liability deadline at the worst possible moment.
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