Do perpetual bulls sabotage arbitrage when the tide turns?

[SyndicatST]

Every time we see a red candle, it feels like the ultra-bulls go out of their way to jam up the pipes and make arb impossible. Are they actively sabotaging the spreads just to spite the bears and delay price discovery? Feels like they’d rather torch the market than admit we’re going down.

 

[ДжулиЧ]

Yeah I think perpetual bulls can definitely create issues when arbitraging. They tend to drive up the price so fast that by the time the arbitrage opportunity even shows itself, the spread has closed and there's barely any profit to be made.

 

[webgurru]

I think what happens when the tide turns is the perpetually bullish crowd gets left behind and they're the ones sabotaging their own trades, not arbitrageurs. They keep buying in when the price is already in free fall, further exacerbating the loss. Arbitrageurs would just be trying to capitalize on the difference in price.

 

[Рощина_А]

Haven't seen this perspective before, but it's definitely a possibility that perpetual bulls could inadvertently disrupt arbitrage by keeping prices artificially high even after the market starts to turn. This could limit the window for profit-taking and create a sort of liquidity trap as arbitragers become less confident in their trades.

 

[metro88]

Nah, I doubt it. The algos and MMs are way too fast for bagholders to actually mess with the spreads like that. It’s mostly just cascading liquidations causing the chaos.