Why does the spread between coins widen and shrink? 📈
🔹 News or a surge of interest in one coin moves it stronger than the second, stretching the spread.
🔹 Large trades and mass position closures also create temporary market imbalances.
🔹 Some of these imbalances level out over time, but not all of them.
🔹 A stretched spread can be simple market noise or the start of a broken connection between assets.
Example: Coin A rises by 8% due to project news while Coin B moves up by 2%. The spread stretches. Afterward, Coin A might pull back so the spread shrinks, or it might stay at the new level.
⚠️ Typical mistake: Considering every spread widening an opportunity without finding out what caused it.
What will you check first when you see a sharp widening of the spread?
#Futures #CryptoTrading #CryptoEducation #RiskManagement
🔹 News or a surge of interest in one coin moves it stronger than the second, stretching the spread.
🔹 Large trades and mass position closures also create temporary market imbalances.
🔹 Some of these imbalances level out over time, but not all of them.
🔹 A stretched spread can be simple market noise or the start of a broken connection between assets.
Example: Coin A rises by 8% due to project news while Coin B moves up by 2%. The spread stretches. Afterward, Coin A might pull back so the spread shrinks, or it might stay at the new level.
⚠️ Typical mistake: Considering every spread widening an opportunity without finding out what caused it.
What will you check first when you see a sharp widening of the spread?
#Futures #CryptoTrading #CryptoEducation #RiskManagement