Traditional hedge funds are increasingly exploring arbitrage opportunities on crypto platforms, driven by factors like 24/7 trading and improved liquidity. Catherine Chen, head of VIP and institutional at Binance, noted during an interview with The Block at Token2049 that funds previously only curious are now actively engaging due to arbitrage tied to traditional finance (TradFi) instruments, such as cash equities and perpetual futures.
Chen highlighted that improved market depth and weekend price discovery make these opportunities more relevant, though liquidity remains insufficient on second- or third-tier or DeFi venues. She cautioned that engagement is still in its early stages, predicting a more significant flow over the next 12 to 18 months.
Meanwhile, crypto-native clients are also incorporating more TradFi-linked instruments to build hybrid portfolios. Chen cited rapid growth in TradFi instruments on Binance, with cash-equity assets under management rising from $800-900 million to $1.4 billion, and perpetual futures volume increasing from $20-30 billion per month to roughly $400 billion monthly.
Chen emphasized that regulatory clarity will be crucial in determining how traditional and crypto-native trading ultimately converge. She stated that once a regulator provides a clear framework, the convergence process will accelerate.