NeoButane

Looking at possible retrace for bitcoin based on March futures

Short
FTX:BTCUSD   Bitcoin / U.S. Dollar
While spot/perps did not hit the holy $50000, many March futures did.

Mostly complete list of exchanges that breached $50000:
  • Deribit
  • OKEx
  • Huobi
  • Binance
  • FTX
  • BitMEX

Surprisingly, CME and Bakkt's March futures were unable to break over $50000. CME's June contract did, however.

REASONING

Futures play a huge role in leveraged trading. I have seen this happen with OKEx's quarterly contracts before. I don't expect a drop to doom, but I also do not expect bitcoin to rush into $50000 within the next few days.

Invalidation if March futures run 50k again and bring spot/perps along with it. Unsure of short target, would likely be ideal to buy the dips.


Comment: Chart of CME's June contract:
Comment: Close up of futures breaking $50k then a bearish retesting of $50k. Also shown is the increase in positive funding for shorts on Binance after the Elong Musk candle (39k -> 43k); ranging from 0.1-0.2%, paid thrice daily.

Abnormally high funding also plays a part in direction as funding rate is meant to bring perpetual swaps back in line with the index price.

While funding is hourly on FTX perpetual swap contracts, the cumulative rate is lower.

Comment: ~40% annualized premium for March futures expiring in less than 2 months. Looks like 50k is being hedged. Funding hasn't lowered, meaning derivatives traders are still very long and spot buys haven't caught up. June contracts are around ~20%% and still above 50k

Comment: I expected that if March futures were being hedged short at 50k, then long positions would unwind and crush the premium while pushing price down to reset funding. This would give a trader the opportunity to basis trade 40% premium and go long on perpetual swaps for a much lower funding rate.

But apes are keeping funding up, premium has not budged, so I am expecting some further downside to demoralize derivatives traders. A bullish dump, unless spot markets can catch up in price to lower perpetual funding costs. That shouldn't happen on the weekend because spot traders usually utilize traditional banks for inflow. Something to watch is 'CME:ES1!' on Sunday open. It's very close to breaking $4000 and has already ATH''d.

(I don't trade fractals like this often, take with pound of salt)
My published indicators: https://www.tradingview.com/u/NeoButane/#published-scripts

Sorry if I haven't replied to your message yet, I'm a bit backlogged :)

Comments

great analysis and very possible scenario. Im personally waiting for confirmations before entering a trade bc we could snap to 50-60K.
+1 Reply
ICEKI cryptotraderog
@cryptotraderog, Nice analysis, easy and simple understand <3
Reply
Lovely analysis
+1 Reply
I agree with you
+1 Reply
I find that its all about premiums. When the premium shoots into a deviation, you can expect spot to go opposite as a balancing force as people arb the difference
+1 Reply
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