Old dog didn't check out anything else today, just kept an eye on $SOXL , which popped 11.676% in the last 24 hours with zero fees—what a freak! An 11-point gain in three times leveraged semiconductors isn't exactly explosive, but the funding rate hitting 0.00000000 is a bit spooky. The price wobbled between 226 and 228 all day, with a volatility of less than 4% over 48 hours. Open interest sat at $42777.69, barely moving, and it felt like both bulls and bears were in sync, with no one willing to pay the protection fee. I pulled up the funding rate curve from the last two weeks; SOXL usually floats between 0.01% and 0.03%, with the bulls always paying. But today, it suddenly hit zero. Either the bears got scared and closed their shorts, or the bulls liquidated positions to the point where no one wanted to hold the premium.
There's an overlooked detail behind this. SOXL tracks the ICE Semiconductor Index with three times leverage, and over in the spot market, the Philadelphia Semiconductor Index has been consolidating with low volume between 5100 and 5180 for four days, while Nvidia and AMD have been flat, and Broadcom is inching up. The Binance TRADIFI perp market prices follow the US stock pre-market and after-hours swings, but the pricing efficiency is lagging behind the actual US stocks because market makers have to keep an eye on liquidity from both sides. Today's zero funding rate for SOXL signals that market makers are pulling back; they don't want to take a position before the US market opens. I've seen setups like this before; on December 18 last year, the Philadelphia Semiconductor Index was flat for five days, then the funding rate suddenly hit zero, and the next day the spot jumped 2.3%, with SOXL soaring 7% and then giving back half within three hours. This kind of position isn't about direction; it's about timing.
My own position has me holding half a position in SOXL at an average price of 219, and I'm not looking to add here. If it drops below 218, I'm clearing out without hesitation; if it breaks above 231, I’ll add another quarter position. Everyone in the market keeps shouting that semiconductor valuations have peaked, with the Philadelphia Semiconductor PE hanging above 28 for three months, but I have to say something against the consensus: this time is completely different from the November 2021 peak. Back then, the funding rate stayed above 0.05% for three weeks, and the bulls were crowded to the max. Now the funding has just hit zero, and open interest hasn’t surged, indicating that retail FOMO hasn’t kicked in yet. The real danger of a top is when the funding spikes to 0.1% and everyone is still shouting about an eternal bull market; today’s scene is clearly not that.
Trading Tags: #BinanceFutures #TradFi #USDⓈM #SOXL #SOXLUSDT $SOXL
There's an overlooked detail behind this. SOXL tracks the ICE Semiconductor Index with three times leverage, and over in the spot market, the Philadelphia Semiconductor Index has been consolidating with low volume between 5100 and 5180 for four days, while Nvidia and AMD have been flat, and Broadcom is inching up. The Binance TRADIFI perp market prices follow the US stock pre-market and after-hours swings, but the pricing efficiency is lagging behind the actual US stocks because market makers have to keep an eye on liquidity from both sides. Today's zero funding rate for SOXL signals that market makers are pulling back; they don't want to take a position before the US market opens. I've seen setups like this before; on December 18 last year, the Philadelphia Semiconductor Index was flat for five days, then the funding rate suddenly hit zero, and the next day the spot jumped 2.3%, with SOXL soaring 7% and then giving back half within three hours. This kind of position isn't about direction; it's about timing.
My own position has me holding half a position in SOXL at an average price of 219, and I'm not looking to add here. If it drops below 218, I'm clearing out without hesitation; if it breaks above 231, I’ll add another quarter position. Everyone in the market keeps shouting that semiconductor valuations have peaked, with the Philadelphia Semiconductor PE hanging above 28 for three months, but I have to say something against the consensus: this time is completely different from the November 2021 peak. Back then, the funding rate stayed above 0.05% for three weeks, and the bulls were crowded to the max. Now the funding has just hit zero, and open interest hasn’t surged, indicating that retail FOMO hasn’t kicked in yet. The real danger of a top is when the funding spikes to 0.1% and everyone is still shouting about an eternal bull market; today’s scene is clearly not that.
Trading Tags: #BinanceFutures #TradFi #USDⓈM #SOXL #SOXLUSDT $SOXL