$H3L Can you tell me why spot and futures prices are both rising, but 3L isn't increasing?

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DivineStick
· 06-16 14:05
3L is just a scam, the platform develops it themselves, can't be trusted
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Earn100UsdDailyWith10KUsd.
· 06-13 02:45
Bro, I can't find you anymore.
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Youyi
· 06-09 11:08
Hello, the trading price of leveraged tokens is determined by market supply and demand, which may result in a premium or discount relative to their net asset value. This can cause their price movements to not be perfectly synchronized with the underlying asset. Additionally, due to the effect of compounding, the actual leverage multiple held over the long term will also change. What you are observing is the difference between the market price and the underlying net asset value, mainly caused by three factors:

Premium/discount caused by market supply and demand: The trading price of leveraged tokens on exchanges is determined by market buyers and sellers, known as the market price. Its true value is the reference net asset value calculated by the fund company. When market sentiment is exuberant and buying demand far exceeds selling, the market price will be above the net asset value, called a "premium"; conversely, during panic selling, the market price will be below the net asset value, called a "discount." This price difference can lead to some deviation between the candlestick chart and the underlying asset.

Long-term effects of the compounding: As mentioned earlier, the net asset value change of leveraged tokens is the result of daily compounded accumulation, not simply a daily instantaneous multiple. Over the long term, the cumulative gains and losses do not necessarily have a fixed 3x or 5x relationship with the spot market. The net asset value change of leveraged tokens is "path-dependent," not just a simple linear addition of gains and losses. It calculates the compounded gains and losses after each rebalancing cycle. (In simple terms, the gains and losses of leveraged tokens are calculated based on the price at the previous rebalancing point, unlike other products such as futures or spot, which calculate gains and losses based on a 24-hour rolling window.)

Leveraged tokens provide a multiplier exposure to the price movements of the underlying asset through their operational mechanism. In markets with clear directional trends, they can offer amplified returns; in extreme market conditions, high leverage can cause the asset value to shrink rapidly. I hope the above explanation helps you understand leveraged token products.
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