Read on Twitter
Alright so its pretty basic, generally the market is putting in higher lows which are mostly created through spot buying while perps often trade at barely any premium (or even on a discount) and futures premiums hitting local lows https://twitter.com/satsdart/status/1381587205097975809
This spot driven support means that (imo) not too many actually want to position themselves through derivatives while btc is down because they for example dont want to hold perps for longer periods of times or because perps traders think they can get better returns trading alts
Then whenever BTC starts pushing up it creates this effect where those traders suddenly find themselves with minimum to no BTC exposure so they ask themselves what the fastest way to get exposure is which is derivatives, so they take 5% of their capital and lever up to not get
left behind with no exposure leading to irrational premiums on derivatives.
The problem with that is that they push price way higher than the spot buyers are willing to pay which just ends up in a slow bleed while those breakout longers are then terribly offsides so theyre easy
The problem with that is that they push price way higher than the spot buyers are willing to pay which just ends up in a slow bleed while those breakout longers are then terribly offsides so theyre easy
liquidity for those taking the short side while selling spot into little to zero bid support because spot buyers are not willing to buy at those high prices which creates these full retraces on the backs of the apes
I'm not saying this is a bad strategy btw, if you think you can outperform btc trading alts go for it, but imo its way smarter to get your long exposure on corrections rather than being a blind breakout ape. You can also just wait for a confirmed ath breakout with a tight stop
This thread for me concludes that we are setting up for a massive breakout soon where alts will capitulate into BTC again because "everyone" apart from long term holders seems to be underexposed
