$SKL 24 hours up 20%, yet the perpetual funding rate has settled negative six times in a row. The 20:00 settlement tonight is at -0.52%, meaning shorts have to pay this much every 4 hours.
This combination is unusual. In a normal rally, longs rush to buy and the funding rate turns positive. SKL is doing the opposite: open interest in perpetuals has doubled from 442 million tokens at 15:00 yesterday to 901 million, with shorts accounting for most of the new positions. The large-holder long/short ratio has steadily fallen from 1.70 to 1.39.
The mechanism is straightforward: shorts are paying a high funding rate while trying to weather the rise. Each time the price pushes higher, the weakest shorts are forced to buy back and close their positions. That's what drove the long green candle at 19:00 straight up to 0.0061.
But the price was immediately knocked back to around 0.0054, suggesting that spot holders are also selling into the rally. On the 1-hour chart, the KDJ J-line has turned down from 81 to 72, and momentum is fading. The price is still above the Keltner Channel midline at 0.0051, while the EMA200 is at 0.00475.
My view is that the short squeeze isn't over yet. As long as the funding rate remains deeply negative and open interest doesn't fall, buyers will be forced to defend the area around 0.0051, and another push to 0.0061 is quite possible. Once the funding rate returns to around zero and open interest drops below 600 million tokens, the fuel for this move will be spent.
I don't have a position in SKL myself. I wouldn't short a market where shorts are crowded and paying funding; I'm just watching to see when the funding rate turns positive. This is my personal opinion.
#SKL #FundingRate
This combination is unusual. In a normal rally, longs rush to buy and the funding rate turns positive. SKL is doing the opposite: open interest in perpetuals has doubled from 442 million tokens at 15:00 yesterday to 901 million, with shorts accounting for most of the new positions. The large-holder long/short ratio has steadily fallen from 1.70 to 1.39.
The mechanism is straightforward: shorts are paying a high funding rate while trying to weather the rise. Each time the price pushes higher, the weakest shorts are forced to buy back and close their positions. That's what drove the long green candle at 19:00 straight up to 0.0061.
But the price was immediately knocked back to around 0.0054, suggesting that spot holders are also selling into the rally. On the 1-hour chart, the KDJ J-line has turned down from 81 to 72, and momentum is fading. The price is still above the Keltner Channel midline at 0.0051, while the EMA200 is at 0.00475.
My view is that the short squeeze isn't over yet. As long as the funding rate remains deeply negative and open interest doesn't fall, buyers will be forced to defend the area around 0.0051, and another push to 0.0061 is quite possible. Once the funding rate returns to around zero and open interest drops below 600 million tokens, the fuel for this move will be spent.
I don't have a position in SKL myself. I wouldn't short a market where shorts are crowded and paying funding; I'm just watching to see when the funding rate turns positive. This is my personal opinion.
#SKL #FundingRate