Don't Fade Sh*tcoins when funding is ungodly!
Please refer to this additional chart for reference (switching to binance SHIBUSD because coinbase went down soon after the squeeze) coinalyze.net/snapshot/HNBlhJVh
This analysis refers to the pump and short squeeze that occurred today on
SHIBUSD
and
SHIBPERP
from 0800 UTC to 1900 UTC OCT 27
Before 0800 UTC SHIB had just experienced a drop caused by long liquidations, it seemed to reset the funding rate but as seen on the coinalyze chart funding started to creep up again as price broke ATH at the psychological level of 0.00006
As price approached to the next psychological level of 0.00007 funding creeped to an incredible -0.05% funding rate, meaning longs were in profit and getting paid 0.05% to continue longing. This negative funding rate was a sign of the amount of shorts growing on
SHIBPERP
Additionally around 1500 UTC SHIB flipped DOGECOIN market cap of $31billion.
It then begin to form a rising wedge from 1530 to 1855 UTC and this is where things got interesting...
2 catalysts played a major roll in the explosive short squeeze that followed at 19:00:
1. First catalyst was spot on
SHIBUSD
Coinbase exchange began to separate from futures price significantly. This backwardation contributed to the huge negative funding rate throughout the development of this wedge. Towards the end of the wedge spot price separated from futures price by 10% or more. This signified that the rally was being led by retailers buying spot rather than futures traders buying longs.
2. Second catalyst was the amount of shorts that kept growing without liquidations by futures traders. This was seen by the large increase in open interest during the wedge development while liquidations stayed eerily low yet funding stayed high.
The boom happened at 1855 UTC and this is my theory what happened... On twitter there was many large "assumed" whale accounts that were publicly stating they were shorting SHIB, so I assumed there were also other whales who had large short positions as well. Many people saw this wedge developing and therefore I assume set their stop loss or liquidation levels right above the wedge at just above ATH. However I don't think that is what triggered the wedge break...
What triggered the wedge to break up I believed was due to the funding payment about to happen at 1900 UTC. You could argue the break was inevitable but it was very coincidental that at 1855, with funding being at the highest of the hour, some whales on FTX (where funding is charged hourly) decided to close and cover their shorts to avoid the payment. This bumped the price up just enough to liquidate the first batch of shorts, skyrocketing spot price and triggering an upwards cascading liquidation event. Once the first batch of shorts cleared, futures price quickly began to catch up to spot price, and arbitration engines kicked into overdrive trying to level out the markets to Coinbase's spot price.
Shorts = Rekt
Now its Oct 28 0200 UTC and another wedge is developing, however, funding rates have "normalized" so we'll see if it triggers another leg up, or if the bears will win today.
This analysis refers to the pump and short squeeze that occurred today on
SHIBUSD
and
SHIBPERP
from 0800 UTC to 1900 UTC OCT 27 Before 0800 UTC SHIB had just experienced a drop caused by long liquidations, it seemed to reset the funding rate but as seen on the coinalyze chart funding started to creep up again as price broke ATH at the psychological level of 0.00006
As price approached to the next psychological level of 0.00007 funding creeped to an incredible -0.05% funding rate, meaning longs were in profit and getting paid 0.05% to continue longing. This negative funding rate was a sign of the amount of shorts growing on
SHIBPERP
Additionally around 1500 UTC SHIB flipped DOGECOIN market cap of $31billion.
It then begin to form a rising wedge from 1530 to 1855 UTC and this is where things got interesting...
2 catalysts played a major roll in the explosive short squeeze that followed at 19:00:
1. First catalyst was spot on
SHIBUSD
Coinbase exchange began to separate from futures price significantly. This backwardation contributed to the huge negative funding rate throughout the development of this wedge. Towards the end of the wedge spot price separated from futures price by 10% or more. This signified that the rally was being led by retailers buying spot rather than futures traders buying longs. 2. Second catalyst was the amount of shorts that kept growing without liquidations by futures traders. This was seen by the large increase in open interest during the wedge development while liquidations stayed eerily low yet funding stayed high.
The boom happened at 1855 UTC and this is my theory what happened... On twitter there was many large "assumed" whale accounts that were publicly stating they were shorting SHIB, so I assumed there were also other whales who had large short positions as well. Many people saw this wedge developing and therefore I assume set their stop loss or liquidation levels right above the wedge at just above ATH. However I don't think that is what triggered the wedge break...
What triggered the wedge to break up I believed was due to the funding payment about to happen at 1900 UTC. You could argue the break was inevitable but it was very coincidental that at 1855, with funding being at the highest of the hour, some whales on FTX (where funding is charged hourly) decided to close and cover their shorts to avoid the payment. This bumped the price up just enough to liquidate the first batch of shorts, skyrocketing spot price and triggering an upwards cascading liquidation event. Once the first batch of shorts cleared, futures price quickly began to catch up to spot price, and arbitration engines kicked into overdrive trying to level out the markets to Coinbase's spot price.
Shorts = Rekt
Now its Oct 28 0200 UTC and another wedge is developing, however, funding rates have "normalized" so we'll see if it triggers another leg up, or if the bears will win today.