According to Cointelegraph: The recent plunge in Bitcoin (BTC) prices, dropping over 18% to $50,000 within 24 hours, has significantly impacted carry trading strategies. This price drop marks Bitcoin's lowest level since February 2024 and reflects broader market risk aversion, influenced by the strengthening of the Japanese yen and volatility in the U.S. bond market.

Carry trading, a strategy popular in the first quarter of 2024, involves capitalizing on the pricing discrepancies between Bitcoin futures and spot prices. However, the latest crash has narrowed this gap, diminishing the profitability of the cash and carry arbitrage. According to Velo Data, the annualized three-month futures premium on Binance has decreased to 3.32%, its lowest since April 2023. Similar declines are observed on exchanges like OKX and Deribit.

Ethereum price fell to as low as $2,172 and bounced back to almost $2,200. 

Premiums on futures contracts have dropped alongside the spot price, causing a significant impact on institutional traders who previously leveraged the higher premiums. Notably, futures on the Chicago Mercantile Exchange (CME) are now trading nearly at par with spot prices, making the returns on the classic cash and carry strategy less attractive. This strategy, which involves holding a long position in the spot market while shorting futures, now offers returns comparable to the 10-year U.S. Treasury note, reducing its appeal.

This decline has also led to Bitcoin's market dominance rising to 58%, with the overall cryptocurrency market cap dropping by 17% to approximately $1.76 trillion, down from $2.16 trillion. The sell-off has resulted in the liquidation of $600 million in leveraged long positions and significant losses in altcoins, including Ether (ETH), which fell nearly 20% in just two hours. At the time of writing, ETH had partially recovered to around $2,200 after hitting a low of $2,172.