Some years ago, a friend of mine survived a tornado nearly striking her house. She lived on a hill and as the tornado rose, it "jumped over" her home causing little damage.
The aftermath proved most difficult. "Tourists" began to drive by the neighborhood, not wishing to help, only to gawk. Some neighbors began to sell the tourists mementos.
The news coverage of the cryptocurrency feels a bit like this, with outlets pausing to gawk. But maybe you can seize the moment and "sell to the tourists."
1 Funding Rates As a Tool
Perpetuals require you to post some collateral and then allow you to trade other coins with leverage. They work like options, but without an expiration date.
In order to tie perps to the value of the underlying coin, there's a funding rate. If too many people are bullish, taking a long position) then they'll need to pay short sellers. The reverse also holds.
If the rates exceed 20%+ or -20% you have extremes that tend to suggest a return to the mean.
2 Too Bearish on $BNB?
The funding rate for $BNB (at the time of writing) across most major exchanges is negative by better than 20%. That's excessively bearish--on an historical basis.
If you're looking for a quick flip on a large coin, this might be your go-to pick. If things take an unexpected turn, at least this coin doesn't move too much, likely limiting your losses.
3 Too Bearish on $OM?
The case with Mantra ($OM) is a bit different. Some major exchanges have quite negative funding rates, including Binance. But many do not.
ByBit even has a positive funding rate.
You'll need to be a bit more tactical with this one--carefully monitoring your entry and exit points. But -50% is excessively bearish historically, so this one is worth watching.
4 Too Bearish on $TAO?
Recently, $TAO launched its much-awaited subnets for trade. These promise to turn $TAO into something of a casino like $virtual.
All the same, the coin sold off with the reset of the market yesterday and presently some of the largest exchanges have deeply negative funding rates for the coin.
This might be your shot to make a quick flip on one of the leading AI x Crypto projects.
5 Some Concluding Thoughts
Funding rates change quickly. Everything outlined here is meant to highlight potential short-term trades. I expect the opportunities will be gone tomorrow--if they materialize today.
This is why you're acting as a memento seller in the wake of a disaster--making a quick buck hawking your wares to tourists.
For the moment, it appears we've found a local bottom. But as always, DYOR. NFA.
Happy Trading!
-Sebastian Purcell, PhD
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