$SAND The last time the funding rate dropped to -0.87% was at midnight on October 3. Spot was at 0.0619 then, and it didn’t fall over the next 12 hours—instead, it surged to 0.0840, up another 36%.
That’s happening again today. The midnight settlement was -0.70%, and the 8 a.m. rate was -0.19%. Based on Binance’s current estimate, traders will have to pay another -0.43% at 4 p.m. The perpetual price is 1.7% below the spot index, and there are clearly more people rushing to sell than to buy in the perpetual market.
Open interest data shows who’s behind the short positions. From 3 p.m. yesterday to 3 a.m. this morning, perpetual open interest, measured in coins, rose from 205 million to 298 million—a 45% increase. Over the same period, the long-position share of the largest holders fell from 59.6% to 50.4%. The big players were short on the new positions. After 3 a.m., open interest fell back to 288 million, while the large holders’ long share recovered to 54.1%. The bears are already starting to back off.
The mechanics are simple: at the midnight funding rate, a 5x leveraged short loses 3.5% of its margin every 8 hours. The price doesn’t need to rise much before those who can’t hold on are forced to buy back.
The last real drop came after the funding rate returned to around zero. Over the two days starting October 5, spot fell from 0.077 to 0.0649, a 16% drop. That’s why, when I’m looking at a market like SAND, I pay more attention to the funding rate than to the candlestick chart.
The difference from early October is spot-market strength. On October 2 and 3, spot trading volume was $63.5 million and $59.4 million, respectively. The October 17 daily candle saw just $19.4 million—less than a third as much. Last night at 10 and 11 p.m., perpetuals traded $21.9 million and $26.5 million in just one hour each. Last time, real money flowed into spot and dragged the shorts along. This time, it’s mostly perpetuals driving the move, so I’m lowering my expectations for the upside.
Technically, the 4-hour price is pressing against the upper Bollinger Band at 0.0629, and the MACD histogram has stayed above the zero line at 0.00108. Below, the 4-hour EMA50 is at 0.0600, almost coinciding with the 1-hour EMA200 at 0.0599. That’s the lifeline for this move.
My view: as long as the funding rate stays below -0.3%, there’s a good chance the market will test last night’s high of 0.0669 again. I’ll start looking for a pullback only once the rate climbs back above -0.05%. If a 4-hour candle closes below 0.059, this thesis is invalidated. I don’t hold any SAND and won’t trade either side.
Personal opinion
#SAND #FundingRate
That’s happening again today. The midnight settlement was -0.70%, and the 8 a.m. rate was -0.19%. Based on Binance’s current estimate, traders will have to pay another -0.43% at 4 p.m. The perpetual price is 1.7% below the spot index, and there are clearly more people rushing to sell than to buy in the perpetual market.
Open interest data shows who’s behind the short positions. From 3 p.m. yesterday to 3 a.m. this morning, perpetual open interest, measured in coins, rose from 205 million to 298 million—a 45% increase. Over the same period, the long-position share of the largest holders fell from 59.6% to 50.4%. The big players were short on the new positions. After 3 a.m., open interest fell back to 288 million, while the large holders’ long share recovered to 54.1%. The bears are already starting to back off.
The mechanics are simple: at the midnight funding rate, a 5x leveraged short loses 3.5% of its margin every 8 hours. The price doesn’t need to rise much before those who can’t hold on are forced to buy back.
The last real drop came after the funding rate returned to around zero. Over the two days starting October 5, spot fell from 0.077 to 0.0649, a 16% drop. That’s why, when I’m looking at a market like SAND, I pay more attention to the funding rate than to the candlestick chart.
The difference from early October is spot-market strength. On October 2 and 3, spot trading volume was $63.5 million and $59.4 million, respectively. The October 17 daily candle saw just $19.4 million—less than a third as much. Last night at 10 and 11 p.m., perpetuals traded $21.9 million and $26.5 million in just one hour each. Last time, real money flowed into spot and dragged the shorts along. This time, it’s mostly perpetuals driving the move, so I’m lowering my expectations for the upside.
Technically, the 4-hour price is pressing against the upper Bollinger Band at 0.0629, and the MACD histogram has stayed above the zero line at 0.00108. Below, the 4-hour EMA50 is at 0.0600, almost coinciding with the 1-hour EMA200 at 0.0599. That’s the lifeline for this move.
My view: as long as the funding rate stays below -0.3%, there’s a good chance the market will test last night’s high of 0.0669 again. I’ll start looking for a pullback only once the rate climbs back above -0.05%. If a 4-hour candle closes below 0.059, this thesis is invalidated. I don’t hold any SAND and won’t trade either side.
Personal opinion
#SAND #FundingRate