Portfolio construction should balance: market caps (large/mid/small), sectors (DeFi/NFTs/Infra), and risk profiles (stablecoins/volatile assets).
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Funding rates in perpetual futures contracts reveal trader positioning. When rates are excessively positive, it shows that longs dominate and are paying shorts, often reflecting over-leverage and bullish euphoria. Such imbalances increase the likelihood of a reversal as prices correct and liquidations occur. Conversely, deeply negative rates suggest bearish overcrowding, with shorts overextended. Market makers and contrarian traders often exploit these conditions, pushing prices against the majority. Monitoring funding rates helps identify unsustainable sentiment and potential turning points. While not foolproof, funding rate extremes remain a reliable signal of possible short-term market reversals and shifts in momentum.
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Rising NFT floor prices may reflect growing risk appetite, often coinciding with altcoin uptrends.
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