Arbitrage in both directions - if done incorrectly, you still lose money. You still pay the funding rate on the contract side when selling, and it ultimately does not make a profit.

More and more funds are starting to engage in Bitcoin spot and contract arbitrage. The method is quite simple: buy spot when Bitcoin pulls back, and sell contracts when it rises. For example, if Bitcoin drops to 94,000, buy spot, and when it rises to 102,000, sell the contract. You might think there’s only about a 5% profit margin in between, but that is a big mistake. Now, the annual funding rate for contracts is 18%, which means this arbitrage opportunity is around 23%. So you see more and more large funds buying Bitcoin spot, while Bitcoin finds it hard to surge significantly. Once it does rise substantially, those who hold a large amount of Bitcoin spot can easily use that to crash the market, and profiting from shorting contracts is essentially the root cause of the pinning phenomenon!