$SIREN 🤔 Did you see the funding rate?
I’ve been paying the funding rate for weeks and thought it would keep going like this for longer. I just checked the funding rate again and surprise 👀
Now it’s the short positions that pay the funding rate—let’s see if they refund the $1 I’ve paid them 😁
Recalling the trading knowledge we learned
Funding Rate: It’s a periodic payment between buyers (longs) and sellers (shorts). Its only purpose is to keep the price of the perpetual futures contract as close as possible to the real asset price in the spot market.
🤓 What does it mean for the rate to be NEGATIVE? (Shorts pay Longs)
It means the futures price is trading below the spot price due to extremely bearish sentiment.
Too many Shorts: There’s an excess of leveraged sell positions (shorts) in the market.
Money Flow: Shorts are required to pay a commission to longs just for keeping their positions open. Staying bearish becomes costly.
Short Squeeze Risk: Since there are so many accumulated shorts, if buyers step in strongly and push the price up, massive liquidations will be triggered. To force-close a short, the exchange must BUY, which causes a cascading surge upward in price (a violent spike).
In summary: A very negative rate = Oversold market, shorts paying a penalty, and a high risk of a violent bullish rebound due to liquidations. Remember to DYOR
I’ve been paying the funding rate for weeks and thought it would keep going like this for longer. I just checked the funding rate again and surprise 👀
Now it’s the short positions that pay the funding rate—let’s see if they refund the $1 I’ve paid them 😁
Recalling the trading knowledge we learned
Funding Rate: It’s a periodic payment between buyers (longs) and sellers (shorts). Its only purpose is to keep the price of the perpetual futures contract as close as possible to the real asset price in the spot market.
🤓 What does it mean for the rate to be NEGATIVE? (Shorts pay Longs)
It means the futures price is trading below the spot price due to extremely bearish sentiment.
Too many Shorts: There’s an excess of leveraged sell positions (shorts) in the market.
Money Flow: Shorts are required to pay a commission to longs just for keeping their positions open. Staying bearish becomes costly.
Short Squeeze Risk: Since there are so many accumulated shorts, if buyers step in strongly and push the price up, massive liquidations will be triggered. To force-close a short, the exchange must BUY, which causes a cascading surge upward in price (a violent spike).
In summary: A very negative rate = Oversold market, shorts paying a penalty, and a high risk of a violent bullish rebound due to liquidations. Remember to DYOR
