Seeing the funding rate hit a 20-month high, yet the price hasn’t really moved.
I don’t like this setup. A surge in the funding rate means the longs are overcrowded—people are willing to pay to hold overnight and bet on the direction. The spot market is calm, while the derivatives are just entertaining themselves. In historical experience, after this kind of divergence, usually one side gets liquidated—most of the time, it’s the overcrowded side.
I don’t trade contracts, but that doesn’t mean I don’t pay attention. The data filters out the noise for me. On the Nth year of DCA, just do what you were going to do.
I don’t like this setup. A surge in the funding rate means the longs are overcrowded—people are willing to pay to hold overnight and bet on the direction. The spot market is calm, while the derivatives are just entertaining themselves. In historical experience, after this kind of divergence, usually one side gets liquidated—most of the time, it’s the overcrowded side.
I don’t trade contracts, but that doesn’t mean I don’t pay attention. The data filters out the noise for me. On the Nth year of DCA, just do what you were going to do.