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How Does Arbitrage between the Spot and Futures Market Help Maintain Price Equilibrium?

Arbitrageurs exploit spot-futures price differences, creating simultaneous buy/sell pressure that forces the markets back into equilibrium.
Greeks.Live19.11.25

How Does Arbitrage between the Spot and Futures Market Help Maintain Price Equilibrium?

Arbitrageurs look for temporary price discrepancies between the spot price and the futures price of a cryptocurrency. If the futures price is too high (contango), an arbitrageur sells the future and buys the spot, locking in a risk-free profit.

If the futures price is too low (backwardation), they buy the future and sell the spot. This simultaneous buying and selling pressure forces the prices back into alignment, ensuring price equilibrium.

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