$PLTR fell more than 8% within 24 hours. At the same time, the funding rate dropped to zero, and the open interest still stayed at around 50,000. Old dog glanced at the data and thought this combination was kind of interesting.
After a sudden drop of 8 points, the market’s first reaction is usually that longs are forced to liquidate and trigger a panic, or shorts疯狂加码. But since the funding rate is 0, it means that at this moment, longs aren’t paying shorts to maintain their positions, and shorts aren’t paying longs either. What does that imply? Put simply, in this round of selloff, neither side is paying crowded costs to keep their positions open. It’s not a typical liquidation cascade, because real liquidations are often accompanied by funding-rate anomalies. This is a key observation.
Another dimension is positioning. With open interest near 50,000 contracts, after the price plunged, it didn’t avalanche. That suggests some portion of positions chose to hold on— or simply didn’t close. But those holding on don’t face extra financial pressure right now, because the funding rate is zero.
My take is: a zero funding rate reduces the risk of a chain-reaction liquidation in the short term caused by funding costs. But it doesn’t mean the price is bottoming out. It’s more like a brief truce between longs and shorts. The downside momentum is coming from one-way selling pressure in spot or futures, not from forced exits by position holders. In the current situation, I think the market is experiencing a frictionless kind of selloff.
The key next step isn’t to watch when the funding rate turns positive or negative, but whether the price—around its current level (near 168.29)—can hold steady and attract new buyers. If it holds and open interest doesn’t shrink but instead increases, with the funding rate staying neutral, then it could be a new opportunity to set up a position. If it can’t hold here and the price drops to the next level, then those longs in the 50,000 contracts that are “holding on” will begin to face the real, substantive pressure of expanding unrealized losses.
The strongest counterargument is this: the zero funding rate might only be calm before the storm. If the price continues to drift down, those long positions that appear able to withstand it may, at some critical point, lose patience at the same time and trigger a wave of long liquidations—where long kills long. Then the funding rate could jump instantly, and the selloff would accelerate. The market is ignoring the average cost line of those 50,000 contracts. We don’t know the exact level, but the continued decline is drawing price closer to it.
So Old dog’s move is: **Don’t chase shorts, and don’t rush to bottom-fish. In the current state, choose to wait and observe.** The trigger is clear: if the price rebounds with volume and holds above 170, and the open interest grows moderately, I’ll consider a small position to try going long.
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