BTC Cross-Exchange Funding Rate Spread Arbitrage: Long Hyperliquid Perp + Short Binance Perp When Funding Spread > 0.025%/8h

A delta-neutral cross-venue funding-spread arbitrage that captures structural differences between Binance and Hyperliquid perpetual funding rates on BTC. When Binance 8h funding exceeds Hyperliquid 8h funding by ≥ 0.025% (annualized ~27%), simultaneously go LONG BTCUSDT on Hyperliquid (receive higher funding from the longs that are crowded on the cheaper venue) and SHORT BTCUSDT on Binance (collect the elevated funding the Binance longs are paying). The two perp legs cancel net delta to <1%, so the trade is directionally hedged — P&L comes purely from the funding-rate differential plus minor basis-convergence dynamics. This fills FIVE under-represented portfolio buckets simultaneously: cross-venue (1.4% → boosts toward 15% target), Hyperliquid (7.5% → toward 20%), long-short direction (13.5% → toward 45%), non-Binance dominance (Binance is 86.1% — this trade reduces single-venue concentration), and mid-term-horizon market-neutral. Critically the mechanism is FUNDAMENTALLY different from every failure this session: it does NOT rely on OHLCV pattern recognition, it does NOT depend on BTC's 2024-2026 microstructure regime (which has decayed every directional BTC strategy), and it has only TWO core parameters (entry-spread threshold, exit-spread threshold) which makes walk-forward overfitting structurally impossible. Position sizing: 25% of equity per leg (50% total margin utilization across both exchanges). Risk per trade: ~1.5% of equity in worst-case basis-divergence + funding-flip scenario.

Directly implements the hypothesis: long Hyperliquid + short Binance when the Binance-minus-Hyperliquid 8h funding spread exceeds 0.025%/8h (~27% APR). The signal is the raw per-8h spread in percent (continuous, recomputed every bar) and is thresholded in should_enter against the matching-unit entry_spread_pct, so the comparison units are consistent. Binance is the primary leg so the backtest's funding_rates feed resolves to Binance USD-M and hl_funding_rates resolves to Hyperliquid by coin, giving both legs correct funding. Hyperliquid's hourly cadence is normalized to an 8h-equivalent via hl_period_scale=8 so the two venues are compared on the same footing the hypothesis specifies. Equal-notional two-leg sizing at 25% equity per leg (50% total margin) makes the pair delta-neutral so P&L comes from the funding differential, not BTC direction; the atomic-hedge entry prevents naked-leg exposure. Only two core edge parameters (entry/exit spread) keep walk-forward overfitting structurally unlikely. Leverage left at 1.0 and unused in sizing, so the leverage gate is satisfied. The strategy fills the cross-venue, Hyperliquid, long-short, non-Binance-dominance, and mid-term market-neutral buckets, and its funding-mechanism edge is independent of OHLCV pattern recognition and BTC's directional regime.

Cross-venue BTC funding-spread arb is structurally fee-dominated and signal-starved, not an optimization candidate. The Binance-vs-Hyperliquid BTC 8h funding differential exceeds the 0.025%/8h entry threshold only 9 times across 56,136 bars (both venues are deeply liquid and tightly arbitraged on BTC), and all 9 events lose: PF 0.80, expectancy -$27.7, Sharpe -13.7, avg_win ($244) ≈ avg_loss ($245). The economics cannot clear: a 4-leg round trip costs ~0.19%+ (Binance ~0.10% RT + HL ~0.09% RT), but the ~9.9h convergence-exit hold accrues only ~0.03% of the targeted differential, so commission is 21.8% of gross and every cycle bleeds. This is NOT the 'engine doesn't credit funding' false reason (funding is credited and both legs read correctly) and NOT a zero-trade wiring bug (9 trades fired) — it is a genuine fee/sparsity wall specific to BTC. Only 9 events is also far too thin to optimize two thresholds without fitting noise, and lowering the threshold harvests more noise at the same fee disadvantage. The mechanism is sound but the target is wrong: funding arb needs an instrument with persistent, large funding skew (e.g. a high-funding altcoin perp or a venue pair with a structural funding gap), not BTC where the cross-venue spread is tiny and rare. Recommend the Research Lead reframe onto a high-funding-skew instrument and require a hold-through-multiple-funding-settlements exit so accrued funding can exceed the 4-leg fee load.