Brothers, let me ask a heart-wrenching question: Is the money you lost in the counterfeit contract really all because you misjudged the rise and fall?
I dare say that at least half of the people fell victim to an 'invisible assassin': the funding rate. This thing is far more insidious than violent crashes and surges; after all, during a crash, you can still hold on and wait for a rebound. But this thing can gnaw away at your margin bit by bit when the price doesn't move at all, making it the 'ultimate weapon' for the big players to harvest retail investors. As someone who has been in the crypto space for eight years, I'll clarify this matter today; those who understand it can at least cut their losses in half!
Let me first provide some basic information for beginners, don't think I'm being verbose. Understanding this is key to realizing how you are being harvested. The funding rate is originally a 'balancing tool' for perpetual contracts, simply put, it’s a 'regulation fee' exchanged between long and short positions, with the goal of keeping contract prices from straying too far from spot prices. Normally, it settles once every 8 hours, and the rate is low enough to be negligible, serving as the market's 'lubricant'.
However, in today's altcoin market, this 'lubricant' has long turned into the market makers' 'harvesting scythe'! In many small coins, market makers have directly compressed the settlement cycle to 1 hour, with rates skyrocketing to deduct 2% per hour! You do the math: there are 24 hours in a day, even if the price doesn't rise or fall at all, just the funding rate can eat away 48% of your margin, and in less than two days, you'll be liquidated directly, which is harsher than a direct crash, it can be called the extreme of 'dull knife cutting meat'.
Why can market makers play this trick so smoothly? The core reason is simple: more than 70% of altcoins are all 'retail-controlled' by market makers! I have summarized three typical characteristics, and you can avoid more than half of the pitfalls by comparing them:
First, the trading volume is fragmented, with daily average transaction amounts only in the millions or even hundreds of thousands. Market makers can easily manipulate the K-line with just a few hundred thousand; second, the chips are highly concentrated, with most coins held in a few wallet addresses, meaning the whole market is effectively in their hands; third, the projects have no actual value, with white papers full of empty talk, and the teams are too afraid to show their faces, relying on concepts like 'metaverse', 'Web3', and 'ecological explosion' to spin stories and scam money.
What's even more disgusting is that the market makers harvest using funding rates, which is always a set of 'combo moves' that are interconnected and hard to defend against. Let me break down this tricky operation for you:
Step one, accumulate chips at a low position + create hype. Market makers first secretly pick up chips at low positions, then hire a bunch of shills to spin stories in various communities, and attract retail investors to enter the market with low rates, telling you 'this coin is going to take off, hurry and go long'; step two, violently drive prices up to induce longs. Once retail investors start entering, market makers directly throw money to violently drive the prices up, creating a false impression of a 'rising bull coin', attracting more people to follow suit and go long. At this time, the contract price will be far higher than the spot price, and the funding rate will be instantly inflated to high levels of 1% or 2%; step three, high-level sideways bleeding. After lifting to a high level, market makers start 'sideways' without raising or lowering the price, and here comes the most fatal part: the high funding rate deducts money from long retail investors every hour, like mosquitoes constantly sucking blood until your margin is nearly exhausted; step four, crashing to finish. Once retail investors either get exhausted by the funding rate or can't hold on and start cutting losses, market makers directly crash the price to dump, causing a price collapse, completing the final wave of harvesting, and after a complete process, retail investors are left with nothing while market makers are filled to the brim.
What's even more outrageous is that some dark market makers play the trick of 'cross-platform arbitrage', creating a false impression of a sharp rise on platforms with high rates to attract retail investors to go long, while simultaneously opening short positions on stable rate platforms for reverse operations, making money from both sides and treating retail investors as cash machines.
I have seen too many retail investors fall into this trap. To put it plainly, there are three 'deadly misunderstandings' regarding funding rates that turn the harvesting knife into a signpost:
First misunderstanding: the higher the rate, the more intense the rise. This is purely self-psychoanalysis! I clearly tell you that when the funding rate is excessively high, it is precisely a signal for the market makers to attract the bulls and prepare to dump. Entering the market to long at this time is no different from giving money to the market makers; second misunderstanding: doing short trades can avoid the rates. Many platforms now have short settlement cycles and fluctuating rates. If you enter and exit frequently, the accumulated fees plus the rate costs often exceed your profits from the price differences, ultimately resulting in 'working hard for nothing, and even paying fees'; third misunderstanding: going short guarantees earning rates. Don't be naive! In a market controlled by market makers, the funding rate is long-term positive. It seems that shorts can earn rates, but market makers can violently drive prices up at any time, and the money you make from rates won't even cover your losses.
Finally, let me say something heartfelt to my brothers, which is also my years of practical experience: in today's altcoin contract market, the funding rate is no longer a balancing tool, but the biggest source of risk. When facing those altcoins with low trading volumes and fluctuating rates, the best strategy is to 'stay as far away as possible'. Don't think you can time the bottom or the top; you are facing market makers who can manipulate prices, adjust rates, and can see your cards. This is not investment; it is gambling, and it is a game you are bound to lose.
If you really can't help but participate, remember two principles: first, include the rate cost in the cost of each transaction, don't just look at the ups and downs; second, set strict profit-taking and stop-loss limits, don't hold on to the idea that 'holding on will bring it back', with coins controlled by the market makers, holding until the end will only lead to liquidation.
The crypto market has never lacked opportunities, but what it lacks is the ability to avoid pitfalls. I will continue to expose the various harvesting tactics of market makers and share practical tips to avoid pitfalls. Follow me@Square-Creator-0a44f19a1d7d9 #ETH走势分析 $BTC .
