As we mentioned previously, perpetuals have a mechanism to ensure pricing aligns with the underlying spot product. We refer to the spread between the Spot and the Perpetual contract as Basis. The resulting exchange of payment between long and short holders of the contract is called the Basis Payment.
Bitcoin has continued to trade on the back-foot today, with prices down 10%. The failure to recapture the $40,000 level has hurt momentum, which in turn has led to buyers displaying patience and waiting for lower levels. Those area's of interest are now upon us, so it will be an interesting end to the week as the bears push for a sub $30,000 print.
Markets reopened in the US and now feel somewhat risk-on. Yesterday the S&P jumped almost 1% while treasuries and gold remained muted. The dollar index fell sharply. Early in Asia, futures are edging higher in Japan and Australia, but seem to be leaning towards a dip in Hong Kong.
Yesterday, we experienced muted volumes and trading during MLK day (equities, bonds, and OTC markets are closed in the US). Crypto markets were open but moves were also muted, albeit for a different reason. BTC prices seem to be narrowing into a—bullish?—pennant with a midline at about $36,000.
On EQONEX, we differentiate between the Market Price and the Mark Price of the perpetual. The Market Price is the last traded price of the product on EQONEX. The Market Price may deviate (significantly) from the rest of the market for example in case of large orders or an illiquid order book. The Mark Price gives a fairer value for the contract by taking a 3-second TWAP of the Market Price. A TWAP is the average of the open, high, low and close price for a specific period. In the case of the Mark Price these periods are three 1-second intervals. As the Mark Price is used for P&L calculation and to determine whether the position needs to be liquidated, using a TWAP to smooth out temporary spikes in prices should prevent unnecessary liquidations.
It will be an interesting week for trading in Asia, as most will look at the economic data coming out of China in the coming days. Last Friday, global indexes fell by about 1% across the board, and this morning, futures look set to follow.
The weekend trading session passed with out incident. Prices have moved from resistance to support and back again, without ever threatening to break the status quo. The bulls will be hopeful that this period of consolidation is building a solid base, giving those who wish to sell Bitcoin plenty of time to make the decision in a stable environment. Once the selling is over, they can resume the march north, unhindered.
Welcome to the Weekender! Every week, we review the top news stories from the digital asset world, as chosen by our readers' clicks. This week we start with the news that Bitcoin exchange Bakkt has inked a business combination deal that will result in the Intercontinental Exchange subsidiary becoming a publicly traded company.
While US politicians continue with impeachment proceedings, on the economic front, Powell assures investors that now is not the time to think about reversing the easing measures that are in place. On a shorter term basis, markets were spooked by yet another jump in jobless claims.
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