Open Interest: It’s a measure of the total number of open positions (combination of longs and

shorts) on these perp exchanges (Binance, Bybit, OKX, Deribit).

 The higher open interest is, the more possible is to liquidate positions, whether that be up or
down.
 The lower the open interest, the more difficult it will be to cause liquidation, whether that
be up or down.

Aggregated Volume/Aggregated Spot Volume: this shows cumulative volume delta on perps and
spot (depending on which one you are looking at).

If perps are rising, it indicates that there’s market buying (it doesn’t track limit order, only market
orders).

If volume is decreasing but price is not decreasing, it means limited buyers are absorbing the market
selling.

Perp Premium: tells you that currently spot exchanges are trading at a higher price than perp
exchanges. This tells us is that there is demand for Bitcoin on spot exchanges.

When there is a perp premium it indicates that you have a lot of people buying Bitcoin on perp
exchanges and paying a higher price for it than they would on spot exchanges.

Typically, this means that there’s some froth in the market because people are essentially borrowing
money to long Bitcoin on perp exchanges, and they are paying even more than what technically fair
value would be, which is the spot price.

Funding: tells you whether the ratio of long to shorts on exchanges is skewed(distorcida) or more
heavily in one direction or the other. Typically, that’s what it implies.

The idea is that perp exchanges are supposed to track spot exchanges, in the perfect world, the price
on a perp exchange matches the price on the spot exchange, but the reality is that perp exchanges
are just trading perpetual contracts that are supposed to track the price of BTC, ideally 1 to 1 but
they don’t. So ideally what the chart does is when the perp price or the price of these perpetual
futures gets a little bit far away from the spot price.

Let’s say the perp price gets a lot higher than spot price, this indicates, first of all that there’s a lot
more aggressive longs jumping in the perp exchanges which is why the price is higher than spot, and
what that typically means is that you will then see a positive funding rate, which means that those
individuals that are currently in long positions on these perp exchanges have to pay a portion of their
position to the holders that are short every 8 hours. And why is that? Well the idea is that if you’re
having to pay to be long, then ideally, some of those longs will start closing and some short will start
opening to king of force the price back in line with what it’s at on the spot exchanges.

So if BTC is trading at $10000 on perp exchange, and it’s trading at $9000 on the spot exchange, that
means that the perp price has gotten out of touch with the actual price on spot exchanges which is
$9000. So in order to fix that, you get positive funding rate in the chart that forces those that are
long on perp exchanges to close their longs by selling and those that are short on perp exchanges to
add on to their shorts again by selling to hopefully bring that price of perp exchange at $10000 in line
with the spot exchange at $9000 and the opposite is true.

Typically when funding is negative is bullish and typically when funding is positive is bearish, but
again, positive funding becomes the norm in very bullish markets, so it’s very rare to see negative
funding in very bullish markets, because when the markets are so obviously bullish, people are
simply ready to pay more and pay to have leveraged positions open, because they know the markets
are so bullish, that they don’t mind paying every 8 hours to keep their long positions open and so
typically in very, very bullish markets funding will stay higher and stay positive much longer than
people are used to.