Have you ever tried shorting in the crypto space, only to be dragged down by negative funding fees every day? Shorting at a -13% premium and losing 12% daily in funding fees, what exactly did you do wrong?
This is not just your predicament; many people have encountered this trap in the crypto world. Today, we will analyze in depth: why shorting is becoming less profitable in the crypto space, why negative funding fees have become your biggest issue, and how to avoid being 'played' by the market.
Shorting in the crypto world: Have you realized the lethality of funding fees?
In the crypto world, shorting was once seen as a quick profit strategy, but as the market has developed, you will find that there are many hidden risks behind shorting. Negative funding fees are one of the most lethal hidden dangers.
Imagine this: you short at $1, thinking the market will continue to fall, only for the price to rebound to $1.5. You still have to bear a daily funding fee of 12%—in just three days, you could lose 54% of your principal! Even if the market eventually drops to $0.5, you might not be able to recover your losses. This is a painful lesson that many realize only after shorting in the crypto world.
The Hidden Manipulation in Low Market Cap Cryptos: Negative Premium Rebounds, You Will Still Lose While Shorting.
In low market cap currencies, the traces of market manipulation are very obvious. Major institutions easily manipulate market prices using the characteristics of low market cap, and you may be unable to judge their true intentions. Even if you accurately judge market trends, the pressure of negative funding fees and negative premiums can force you into a forced liquidation during rebounds.
When the market is in a negative premium state, the risks of shorting multiply. The strategy of major players pulling spot or crashing contracts directly compresses the profit space for short sellers to nearly zero, and the continuous rise in funding fees forces you to endure unbearable costs. The cost of negative funding fees over three days can be enough to break you.
The Truth Behind Market Manipulation in the Crypto World: Lack of Transparency Keeps You Forever 'Behind'
The flow of funds in the market and the means of manipulation by major players often determine the outcome before you can react. The crypto space is not as transparent as traditional markets; information asymmetry keeps you in a passive state forever. When you see the market falling, you might think you've seized an opportunity, but in reality, large funds have already begun to manipulate it, and the pressure of funding fees makes your trades meaningless.
The Low Cost-Effectiveness of Shorting: High Risks and Low Returns in the Crypto World.
Shorting is not impossible to profit from, but in the high funding fee environment of the crypto space, the cost-effectiveness of shorting is simply too low. Especially in low market cap currencies, the rebounds brought by negative premiums and the pressure from funding fees turn shorting into a long-term war of attrition. Even if your judgment of market direction is correct, you cannot withstand the erosion of funding fees.
In this situation, long-term holding and negative funding fees make shorting an extremely painful and inefficient choice. Whether the market ultimately falls or not, funding fees will force you to close positions, making it difficult to achieve real profits.
How to Avoid Being Dragged Down by Funding Fees?
Understanding the Nature of Market Volatility: Market manipulation in the crypto world has become increasingly covert, with major institutions using negative premiums for rebounds, often trapping short sellers in a passive position. Therefore, when choosing to short, one must be more cautious and avoid blindly following the trend.
Adjust Strategies Timely, Go Long Instead of Shorting: When market sentiment is overly pessimistic, consider turning to long positions to avoid excessive shorting. In a bull market, do not blindly pursue short-term profits; instead, seize long-term opportunities for greater returns.
Control Positions, Manage Risks: In the face of high funding fees, it is particularly important to manage risks by controlling positions reasonably. Do not over-leverage due to temporary confidence, and ensure proper stop-loss and risk management.
Be Patient, Choose Higher Cost-Effectiveness Trading Opportunities: The market cannot keep falling forever; learn to wait for the right moment to make decisions, and avoid entering blindly. The crypto world is full of opportunities but also full of traps; rational investing is the ultimate key to making money.
Summary: Shorting is not the only way out.
Since entering the space in 2022, the crypto world has undergone drastic changes. The old mindset of purely relying on shorting for profit is outdated. Today's crypto market requires more mature investors; shorting is no longer the only way to profit. Learning to identify market signals, flexibly adjust strategies, and control funding fee risks is the key to survival.
If you're not making money, take a break; after all, if you can't even do long trades well, don't think about shorting. Give yourself some space to reassess the market; future opportunities still belong to those with vision. #资金费率 #负资金费率
