When the perpetual price is lower than the spot price as in the current case of Bitcoin, it indicates traders are massively offloading the asset in the perpetual futures market as they believe there could be an incoming price fall. Expectedly, XBTManager predicts this negative spot-perpetual gap will translate into a heightened selling pressure in the spot market as several traders will look to sell their assets and buy in the perpetual market thus taking advantage of the arbitrage to gain some profit. In the advent of such a reaction, deep liquidation hunts might occur i.e.where a large number of leverage positions are forcefully closed down, leading to a larger negative Spot-Perpetual Gap, and increased selling activity. However, XBTManager has noted a potential positive for Bitcoin in this uncanny situation.
Record Low Funding Rates on Binance Signal Market Shift Wide Spot-Perpetual Gap Spells Trouble For Bitcoin On August 16, XBTManager reported that Bitcoin’s Spot-Perpetual Price Gap, as tracked on the Binance exchange, is continually in a negative form indicating that the asset may record more price loss due to a sustained selling pressure. For context, a Spot-Perpetual Price gap occurs when there is a difference between the valuation of Bitcoin on the spot market which deals with the asset’s actual price, and on the perpetual markets which allow traders to deal in speculations of the Bitcoin’s future price.
The analyst states that high selling pressure will likely result in an accumulation of multiple short portions on Bitcoin. Therefore, the instance of a sudden price gain might force these positions to close leading to some significant buying activity that could reduce the current negative Spot-Perpetual Price gap.
The story "Bitcoin Spot-Perpetual Gap Points To Continued Selling Pressure – Analyst" has 406 words across 58 sentences, which will take approximately 2 - 4 minutes for the average person to read.
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