On May 6th, $LAYER dropped sharply from 3.4 to 2.0 USD.
My best friend and I – the “experts at opposite views” – were sitting at a café, laughing at each other:
I said:
– “I’m long on 5k. The drop is too steep, it’s bound to bounce.”
He nodded:
– “I’m short 5k. Unlocking tokens are coming, it’s gonna drop more.”
We both confidently entered at 2.06.
It seemed like a battle… but little did we know, the third party was gonna win.
Less than 10 minutes after entering, I heard a “ting” – Binance notification: funding rate is -2%/hour.
I thought to myself: “Nice! He’s short, he’s paying me every hour.”
He smirked: “Let the funding deal with itself, as long as the price drops.”
And the price did drop – but it dropped... in a way that destroyed both of us.
After the entry, the price dropped to 1.96, then... bounced back to 2.01.
Then it dropped to 1.91, before bouncing up again to 1.94.
=> Just enough for me to lose because my long entry was bad, and him to panic because his margin was getting squeezed.
And the funding?
Every hour, he paid me a few dozen bucks.
And I? Watched my wallet shrink because the price wouldn’t rise.
=> Eventually, I cut my long position to avoid a deeper loss.
=> He held on to his short for another 4 hours, and the funding ate into his profits, getting partially liquidated due to a small bounce at 1.9 -> 2.0.
Result:
– I lost because I longed at the wrong time, and the price didn’t bounce enough.
– He lost because he was right about the trend but got eaten by funding and short-term price fluctuations.
– We both looked at each other, laughing with empty wallets.
– Meanwhile, CZ posted a picture of him riding a jet ski:
> "Volatility is opportunity. Thank you for your support."
---
Moral of the story:
– Funding -2%/hour isn’t an opportunity – it’s a blood-sucking machine.
– When long and short traders face off, both can lose.
– And CZ still has $10,000, even though each of us only bet $5,000.