Comparison BTC and ETH pairs between BitMEX, Deribit and FTX Perpetual Swaps vs Coinbase (Spot) price basis.
We can observe an on-going basis pattern currently trending positive (trading with premium).
Positive basis is leading information towards funding rate becoming positive as well.
Positive Funding rates means Longs pay Shorts
Longs paying shorts mean market makers will have the incentive to provide liquidity to longs. Even if that means another 30% rally up but crash bellow price point where funding turned positive is strongly possible.
These analysis are nuanced as usual but as we keep trading in the range the more stronger is the bearish case if we dont see the flip to the negative side.
Basis being positive means that Funding rates will be affected accordingly to the positive side.
When price trading with a premium market makers have the incentive to provide liquidity to longs by being short because they earn the funding. This is particular important at top of uptrend rallies where they can "engineer" another (fomo) rally or an upthrust while knowing that dump is eminent because of the path of least resistance.
This can also be used to artificually surpress price moving too much up. Likewise they keep providing strong liquidity to shorts while ensuring that price wont move much and this way allowing alts to have their rally vs btc and eth.
So either this is an effort to keep price still trading in the range while allowing alts to run OR it's the beggining of another significant drop in BTC and ETH price.
We can observe an on-going basis pattern currently trending positive (trading with premium).
Positive basis is leading information towards funding rate becoming positive as well.
Positive Funding rates means Longs pay Shorts
Longs paying shorts mean market makers will have the incentive to provide liquidity to longs. Even if that means another 30% rally up but crash bellow price point where funding turned positive is strongly possible.
These analysis are nuanced as usual but as we keep trading in the range the more stronger is the bearish case if we dont see the flip to the negative side.
Basis being positive means that Funding rates will be affected accordingly to the positive side.
When price trading with a premium market makers have the incentive to provide liquidity to longs by being short because they earn the funding. This is particular important at top of uptrend rallies where they can "engineer" another (fomo) rally or an upthrust while knowing that dump is eminent because of the path of least resistance.
This can also be used to artificually surpress price moving too much up. Likewise they keep providing strong liquidity to shorts while ensuring that price wont move much and this way allowing alts to have their rally vs btc and eth.
So either this is an effort to keep price still trading in the range while allowing alts to run OR it's the beggining of another significant drop in BTC and ETH price.
D7R