Bitcoin Perpetual Swaps v Spot basis suggest overlev longs
Bottom indicator showing some important Perpetual Swaps contracts vs Coinbase price basis
baseline = spot price
basis positive = swaps trading at premium (generally strong over-leveraged LONG exposure ), push longs paying funding to shorts
basis negative = swaps trading at discount (generally strong over-leveraged SHORT exposure ), push short paying funding to longs
We can observe ongoing existence of what is likely to be over leveraged longs.
The swaps been trading significantly at premium.
Trading at premium mean that swaps funding rates rise substantially and consistently putting pressure on longs since longs pay shorts.
Market-markers are on the receiving side of that funding to offset the risk of being against the trend while providing liquidity to a market that may for the moment may be losing some steam on the demand side waiting for a pullback
Price been trading consistently above the trendline which remain intact but the swap-spot basis suggest a strong pull may occur in the future. Staying full long (specially if entry is very recent) in what looks like a very possible local top, even if we wick towards 20.1k, is very risky.
baseline = spot price
basis positive = swaps trading at premium (generally strong over-leveraged LONG exposure ), push longs paying funding to shorts
basis negative = swaps trading at discount (generally strong over-leveraged SHORT exposure ), push short paying funding to longs
We can observe ongoing existence of what is likely to be over leveraged longs.
The swaps been trading significantly at premium.
Trading at premium mean that swaps funding rates rise substantially and consistently putting pressure on longs since longs pay shorts.
Market-markers are on the receiving side of that funding to offset the risk of being against the trend while providing liquidity to a market that may for the moment may be losing some steam on the demand side waiting for a pullback
Price been trading consistently above the trendline which remain intact but the swap-spot basis suggest a strong pull may occur in the future. Staying full long (specially if entry is very recent) in what looks like a very possible local top, even if we wick towards 20.1k, is very risky.
D7R
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