We are seeing a significant technical anomaly in $RIVER that every trader should understand to protect their capital. This is not a mistake or manipulation, but an extreme imbalance between the Spot and Futures markets.
If you observe the captures, you will see a price difference of almost 10%
SPOT: $59 (Real value of the asset).
FUTURES: $54 (Value of the perpetual contract).
There is massive selling pressure in the Futures market. So many traders are opening Short positions trying to find the peak of the rise that they have pushed the contract price down by 5 dollars below its real value in Spot.
As perpetual contracts have no expiration date, the exchange uses the Funding Rate as an anchor to force both prices to balance.
In this case, with Futures being far below Spot, the Funding is negative and extreme. This means that all those who are in Short pay a mandatory fee to those who are in Long.
Due to volatility, the charge is being made every hour instead of every 8 or 4 hours.
This is where many traders get trapped. You can open a Short at $54 and have the price drop to $53. In theory, you are gaining. However, if the funding rate is 1% or 2% per hour, the cost of keeping that position open will be greater than your profit from the price movement.
Upon closing, you will see that you have less capital than at the beginning. You are not fighting against the chart, you are fighting against the cost of the position.
Before trading assets with such large imbalances, it is vital to review the Funding Rate and the remaining time for the next charge.
The best tool for the trader is not just technical analysis but understanding the financial structure of what they are trading.
$RIVER
