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Is the rise to $3600 not driven by real demand? Uncovering the arbitrage game behind Ethereum spot and perpetual contracts
The price fluctuations of Ethereum seem simple: retail enthusiasm is high, prices soar, and market optimism continues to ferment. But beneath the surface lies a structurally complex market mechanism. The interweaving of funding rate markets, neutral strategy institutions' hedging operations, and recursive leverage demand reveals the deep systemic vulnerabilities in the current crypto market.
We are witnessing a rare phenomenon: leverage has essentially become liquidity itself. The massive long positions taken by retail investors are fundamentally reshaping the way neutral capital allocation risks are managed, giving rise to a new type of market vulnerability that most market participants have yet to fully recognize.