Bitcoin futures interest hit a record high of over 500,000 BTC ($36.3 billion) on Monday, largely attributed to an arbitrage strategy employed by institutional traders. Analysts suggest that these traders are executing a "cash and carry trade" where they short Bitcoin on the CME while buying an equivalent amount via Bitcoin spot ETFs.

This strategy, which yields a 6.4% annualized return, is employed when a significant premium exists between a commodity's futures and spot prices. Bitcoin often fits this scenario, with perpetual swap traders currently willing to pay a 10% premium to shorts for the privilege of being long Bitcoin with leverage.

Bitcoin futures open interest has surged by 21% in Bitcoin terms and 100% in USD terms since the start of the year, with a significant portion of this growth occurring in the CME. The cash and carry trade strategy has added depth to the markets and kept spot and futures markets closely aligned. However, for the market to gain momentum, a substantial impulse of non-arbitrage demand is required, according to analysts.