One personal habit of mine: when the funding rate for a trending coin gets increasingly negative, I don’t chase the short.
This morning’s example was $W, ranked No. 10 on Square’s trending list.
・Price: OKX perpetuals around 0.0129, down about 1% over 24 hours; it’s been falling steadily from the 10/13 daily open of 0.0241
・Funding rate: Settled every 4 hours. It was around −0.012% yesterday at 16:00, and had reached −0.047% by 08:00 today, meaning shorts are paying longs
・Open interest is only around $2.46 million. It’s a small market, so a squeeze could happen fast
My take: The more negative the funding rate gets, the more crowded the short side is. Chasing a short here means paying fees while betting that the price will keep falling. I’d wait for the funding rate to return to around 0, or for the price to break below yesterday’s low of 0.0125 before reassessing. I wouldn’t open a new short here.
For comparison, $CRV, ranked No. 5 on the trending list, is up about 1.7% over 24 hours, with a +0.01% funding rate—a normal level, with no clear imbalance in either direction.
Risk: A deeply negative funding rate doesn’t guarantee a short squeeze. If the negative catalysts remain, the rate could stay negative while the price keeps falling.
When you encounter a coin with a funding rate this negative, would you go long against the crowd, keep shorting, or stay away altogether?
#FundingRate #Altcoins #BinanceSquare #加密貨幣
Binance referral code: BRYANTTRADE
For more resources, see the BIO on my profile.
Not investment advice. Investing involves risk.
This morning’s example was $W, ranked No. 10 on Square’s trending list.
・Price: OKX perpetuals around 0.0129, down about 1% over 24 hours; it’s been falling steadily from the 10/13 daily open of 0.0241
・Funding rate: Settled every 4 hours. It was around −0.012% yesterday at 16:00, and had reached −0.047% by 08:00 today, meaning shorts are paying longs
・Open interest is only around $2.46 million. It’s a small market, so a squeeze could happen fast
My take: The more negative the funding rate gets, the more crowded the short side is. Chasing a short here means paying fees while betting that the price will keep falling. I’d wait for the funding rate to return to around 0, or for the price to break below yesterday’s low of 0.0125 before reassessing. I wouldn’t open a new short here.
For comparison, $CRV, ranked No. 5 on the trending list, is up about 1.7% over 24 hours, with a +0.01% funding rate—a normal level, with no clear imbalance in either direction.
Risk: A deeply negative funding rate doesn’t guarantee a short squeeze. If the negative catalysts remain, the rate could stay negative while the price keeps falling.
When you encounter a coin with a funding rate this negative, would you go long against the crowd, keep shorting, or stay away altogether?
#FundingRate #Altcoins #BinanceSquare #加密貨幣
Binance referral code: BRYANTTRADE
For more resources, see the BIO on my profile.
Not investment advice. Investing involves risk.