QCP Capital Market Quick Take-14 Mar 24

– BTC price is stalling near the highs and funding/front-end forwards have come off hard.
– Perp funding is back to lows and Mar/Apr futures are below 30% with Binance forwards lower than Deribit!
– Does this drop in funding rates signal a reversal in leveraged long interest, meaning spot price will come off?
– Or does a reduction in leverage levels open the path for spot price to take another leg higher?
– This is impossible to say, but we do know it is difficult it is for funding rates to sustain at these elevated levels and we think it will continue to normalize. This could be a good chance to sell more spot-forward spreads before it normalizes further (indicative run below).
– Another interesting observation is the rotation of capital into large cap alts with SOL, BNB and AVAX significantly higher overnight.
– BNB in particular has managed to create a virtuous self-reinforcing cycle through its launchpool as BNB stakers sell their hefty airdrops and buy even more BNB to compound returns for the next launchpool release (this is practically weekly compounding given the frequency of releases!).

Indicative spot-forward basis/spread: