I believe we are in a new market paradigm.
The old paradigm had exchanges taking the other side of customer trades. Most the volume and interest were in perpetual futures, therefore exchanges were incentivized to clear out customer positions by moving prices to liquidation levels. This has been true almost every time the market has been heavily long. (and it has been true for over 200 years ever since trading shops were in operation)
However, recently the market was heavily long, yet price did not flush. I believe the reason for this is the growing size of the Bitcoin spot market relative to perpetual futures.
We are getting weekly inflows of billions of USD into Bitcoin, while total open interest is ~10 billion. It makes sense that newly accumulated open interest is no longer significant enough to affect price like the Bitmex days.
Billions of dollars of Bitcoin are being bought in the spot market. This would make it unprofitable or impossible to push price low enough to flush long positions, especially now that most of the long positions are heavily in profit. This is a symptom of the bull market. There will be a new normal in terms of funding, and market participants must adapt to the conditions of a bull market.
And if we are in a bull market, we must act accordingly.
Note: I did not post this during consolidation, but during an exponential move. So it would not surprise me if this was a local top. However the local top will be broken again. Long Bitcoin and hold tightly. We will break new highs this year.
The old paradigm had exchanges taking the other side of customer trades. Most the volume and interest were in perpetual futures, therefore exchanges were incentivized to clear out customer positions by moving prices to liquidation levels. This has been true almost every time the market has been heavily long. (and it has been true for over 200 years ever since trading shops were in operation)
However, recently the market was heavily long, yet price did not flush. I believe the reason for this is the growing size of the Bitcoin spot market relative to perpetual futures.
We are getting weekly inflows of billions of USD into Bitcoin, while total open interest is ~10 billion. It makes sense that newly accumulated open interest is no longer significant enough to affect price like the Bitmex days.
Billions of dollars of Bitcoin are being bought in the spot market. This would make it unprofitable or impossible to push price low enough to flush long positions, especially now that most of the long positions are heavily in profit. This is a symptom of the bull market. There will be a new normal in terms of funding, and market participants must adapt to the conditions of a bull market.
And if we are in a bull market, we must act accordingly.
Note: I did not post this during consolidation, but during an exponential move. So it would not surprise me if this was a local top. However the local top will be broken again. Long Bitcoin and hold tightly. We will break new highs this year.