An indicator that shows you the basis, which is the premium that classic contracts are trading at compared to the spot market.
By default its settings are for bitcoin quarterly contracts (closest expiration date), although there's a lot of customizing possible.
You could also use this indicator for other coins but then you'll have to change the inputs.
I'll manually update the contracts when they get close to expiration, but you could do this yourself as well (just in case I disappear for some reason and don't update it anymore).
For more info on what the basis is exactly check out this short educational post (click chart):
As previously mentioned, the default settings are for bitcoin .
The index used is the Bitmex BXBT index. It's a dynamic and weighted spot index which is perfect to get an average price of the spot market.
If you want to look at the ethereum basis for example then I suggest using the BETH Bitmex index, same concept as the BXBT chart but for ETH.
The used are quarterly contracts of the most prominent exchanges in crypto.
There's also an option to add an average plot (or only show the average: use the selection box) which calculates the average premium of all the contracts selected (you can also choose to exclude certain contracts).
The standard settings show you the premium in percentage terms, but there's also an options to show the annualized premium.
If I don't update the indicator when the contracts expire you'll have to fill in the tickers of the next quarterlies and you'll also have to change the expiration date to make sure this annualized premium still works.
There's a "zero line" you can add which is useful for when the get close to backwardation.
And you can set up and signals of your choosing. By default it shows a bull signal when the premium goes below zero and a bear signal when the premium goes above 10 (if you put it on annualized you'll want to change this threshold).
The basis can be very useful to gauge market sentiment.
It can give you a better idea of how aggressive market participants are by looking at how much the are going up or down relatively to spot.
Divergences also often have an impact .
If you want access to this indicator send me a private message so we can discuss it.
- Added Bybit futures contract.
- Changed display mode to a percentage.
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