30s Summary

Bitcoin nears the $90,000 mark amid market excitement and worry of potential price drop. Singapore-based crypto trading firm QCP Capital has shared its analysis, indicating a euphoria in the market, with future ‘perpetuals’ funding at a high, and basis yields at a seven-month peak. The firm remains bullish but warns of sudden pullbacks causing price drops. High funding rates suggest bullish positions are becoming crowded. Such positions could potentially create downward pressures in the market. With standard futures contracts trading at an annualized premium of over 15%, QCP Capital believes the sharp spikes in these ‘basis yields’ are typically short-lived.

Full Article

The market is buzzing with excitement as the price of Bitcoin is nearing the $90,000 mark. This market hype and widespread belief that the price will continue to surge might be a warning of a potential drop in prices.

Singapore-based crypto trading firm QCP Capital has the latest analysis of this situation. With Bitcoin breaching significant resistance levels and out of its multi-month range, there’s a definite euphoria in the market. Funding for ‘perpetuals’, futures without expiry, is very high, and basis yields have reached a seven-month peak. The firm remains bullish due to these metrics, but it’s also wary of any sudden pullbacks that leveraged washouts might trigger, causing price drops.

Rising open interest-weighted funding rates in these perpetuals signal that long, bullish positions are likely getting crowded. A minor price pullback could cause these highly-leveraged bulls to back off, close their long positions, and inadvertently intensify downward pressures in the market.

The funding rate is elevated, meaning perpetual futures are trading at a premium to the spot price. Standard futures contracts are also trading at an annualized premium of over 15% across all exchanges. This premium is the return achievable on the market-neutral cash and carry arbitrage strategy that involves buying the asset in the spot market while simultaneously selling a futures contract.

QCP Capital notes that historically, such sharp spikes in these ‘basis yields’ are typically short-lived. As of this write-up, Bitcoin is trading at $88,300, a nearly 30% increase in seven days after hitting an overnight high of $89,622.