Leverage and Boredom

Futures open interest has reached a new all-time-high, and a significant portion is coming from traders on the CME exchange. And yet Bitcoin just keeps chopping wood, driving everyone mad.

Boredom is a legitimate hurdle rate in markets. The price goes full crab-mode, and grinds sideways for just long enough to shake a significant number of people out.

These periods are a characterised by:

• Micro pumps, which are little green candles that gets everyone excited that we’re finally back, and are headed to new ATHs. These are usually followed by…

• Micro dumps, which are equally little red candles which shatter our short term dreams, and get all the doom-bears posting on twitter once again.

If you closed your eyes for three months, the market could be at the exact same price…but the road to get there is littered with folks who gambled away their position with leverage to cope with the boredom. Many such cases.

In today’s piece, I will give a quick update about how the market appears to be dealing with its boredom, which is more often than not by using leverage. This builds upon the cash-and-carry trade which I detailed in my post earlier this week.