BTC-ETH Perp Funding Rate Differential Spread Market-Neutral Pair (BINANCE USD-M, 4H Monitoring, 3-Parameter, Dollar-Neutral, Direct Implementation of BTC Negative Funding Carry Abandon Recommendation)

A DOLLAR-NEUTRAL CROSS-ASSET PAIR strategy that captures the FUNDING RATE DIFFERENTIAL between BTC and ETH perpetuals on BINANCE USD-M. Mechanism: at each 4H bar close, retrieve the most recent 8h funding rates for both BTCUSDT.BINANCE and ETHUSDT.BINANCE perpetuals. Compute differential = ETH_funding − BTC_funding. When |differential| exceeds the threshold (default 0.05% per 8h = ~0.15% per day): if differential > 0 (ETH funding higher), simultaneously LONG BTC + SHORT ETH in equal dollar notional (collect ETH funding by being short, avoid BTC funding cost by being on the lower-funding side). If differential < 0 (BTC funding higher), reverse: LONG ETH + SHORT BTC. Exit when differential reverts to 0 OR after a hard 48-bar (~8 day) time stop. This captures the cross-asset funding carry while being market-neutral on BTC/ETH price correlation (~0.85 historically). STRATEGIC RATIONALE: (1) DIRECT IMPLEMENTATION OF ANALYST RECOMMENDATION — the BTC Persistent Negative Funding Carry abandon notes explicitly recommend 'Future funding-based hypotheses should be (c) cross-asset funding spreads (BTC vs ETH funding divergence)'. This proposal is the natural test of that recommendation. (2) STRUCTURALLY DIFFERENT FROM EXISTING STRATEGIES: distinct from FundingCarryBasket5Perps4HLong (which is long-only carry on INDIVIDUAL assets when their individual funding is negative); this is CROSS-ASSET DIFFERENTIAL (the relative funding rate between two assets). Distinct from EthBtcRatioFourHourBollingerMRLongPair (which trades PRICE ratio MR, not funding). Distinct from BtcInterExchangeBasisMeanReversion (which is cross-venue PRICE basis, this is single-venue cross-asset FUNDING differential). (3) PORTFOLIO QUOTA FILL — long_short at 12.5% vs heavy push to reduce 87.5% long_only over-representation. This is a TRUE market-neutral pair (long BTC + short ETH or vice versa in equal $ notional). (4) MECHANISM IS NEUTRAL TO LONG/SHORT BIAS PROBLEM: unlike a pure positive-funding short or pure negative-funding long, the differential trade is symmetric — it captures carry from EITHER direction depending on which side of the spread is paying more. This eliminates the directional asymmetry that makes single-asset funding short strategies risky. (5) AVOIDS ALL RECENT FAILURE PATTERNS: NOT Donchian/breakout (system-wide regime decay confirmed); NOT funding+SMA conjunction (no trend filter); NOT cross-venue basis arb (single venue); NOT skewness; NOT OI surge regime-dependent; NOT volume surge daily; NOT Connors down-day; NOT BB MR. (6) FEE MATH EXPLICITLY VIABLE: 4 legs per round trip × 0.05% taker = 0.20% RT. Typical funding differential at 0.05%/8h sustained over 2-5 day hold = 6-15 funding events captured × 0.05% × position_pct_per_leg (0.30) = ~0.10-0.30% NET carry per trade after fees. Plus convergence gain when differential returns to 0: 0.05-0.20% per trade. Combined: +0.15-0.50% NET per trade. (7) ITERATION-SAFE: only 3 hypothesis-declared tunable parameters (differential_threshold, position_pct_per_leg, lookback_periods_for_signal_smoothing). NO stop_loss parameter, NO take_profit parameter — explicit fix for LINK/ETH iter-2 optimizer-reversal failure. Exits are deterministic: differential reverts to 0 OR 48-bar time cap (NOT tunable). (8) HOLDOUT-FAVORABLE EDGE: funding differentials are MECHANICALLY guaranteed cash flows (not directional predictions), so they don't suffer from regime decay the way breakout strategies do. BTC and ETH funding rates have been actively differential throughout 2020-2026 with no observed compression in the differential dynamic.