You don’t see the funding rate fall to -0.4938% every day. At the current price of 0.0677, this fee level means that short sellers now have to keep paying to hold their positions—not a small amount, but an outflow with every settlement period.
Look at it another way: which direction is the money piling into? The answer is that the short side is already crowded. When too many people are on one side, the risk of a stampede isn’t determined by price alone—it’s determined by cost. As long as the price stops moving in their favor, these ongoing payments become a rope, tightening little by little until someone lets go first. Letting go means buying back, and buying back pushes the price up.
So I’m more inclined to see an extreme funding rate like this as a reversal signal taking shape, rather than a sign that the trend is about to gain momentum. The closer we get to this level, the more we should ask: who can bear this cost, and for how long? $LA
#LA
Look at it another way: which direction is the money piling into? The answer is that the short side is already crowded. When too many people are on one side, the risk of a stampede isn’t determined by price alone—it’s determined by cost. As long as the price stops moving in their favor, these ongoing payments become a rope, tightening little by little until someone lets go first. Letting go means buying back, and buying back pushes the price up.
So I’m more inclined to see an extreme funding rate like this as a reversal signal taking shape, rather than a sign that the trend is about to gain momentum. The closer we get to this level, the more we should ask: who can bear this cost, and for how long? $LA
#LA