This is a deeply educational inner conversation
Yesterday someone asked me why the exchange suddenly surged and plummeted (here referring to times without any news), and I also saw some people saying that what the contract traders are doing is causing trouble.
Those who raised these points generally do not understand the mechanisms of the exchange...
Actually, there are three reasons
1. If it really is the traders causing trouble, so what? It still indicates that there are buying or selling actions, and the market is active.
2. A bunch of retail investors randomly setting stop-loss positions and ignoring liquidation positions, believing in some so-called support and resistance levels without leaving room, causing a chain reaction after one explodes or hits a stop-loss, affecting price levels, leading to a series of explosions.
3. The positive and negative conversion of funding rates; some people use external bots to play with funding rates, or utilize the functions of the exchange itself. Thus, whenever the funding rate countdown occurs, long and short positions start to convert with each other, causing a certain degree of volatility, which then leads to the second point's chain reaction.
4. The spot grid strategy has always been a tool for arbitrage that looks bullish all the way; the ultimate goal of buying is to sell. The grid is a basic arbitrage tool, used by more and more people, so at almost fixed frequencies, when prices reach a certain point, a bunch of bots will buy or sell, leading to the chain reaction mentioned in the second point.
5. A bunch of leveraged borrowed coins that have been held for too long; once the time is up, interest is due, and if there is no interest to be collected, the system automatically closes some positions, causing price fluctuations and then chain reactions.
6. Large holders harvest while standing in the mindset of the gamblers on the opposing side.
#pi幣 #币安投票上币