The ongoing negative interest rate in AERGO perpetual contracts essentially reflects that the demand for short positions continues to exceed that for long positions, resulting in contract prices being lower than spot prices (i.e., 'backwardation'). The following points provide interpretations and feasible operational ideas:
⸻———————————————————————
1. Why Continuous Negative Interest Rates Occur
1. Bearish Market Sentiment
When the majority of traders bet on a decline in AERGO's price, the trading price of perpetual contracts typically falls below the spot price, leading the system to set a negative interest rate, where the short position pays the long position to incentivize more bulls to enter and narrow the price gap.
2. Liquidity and Market Making Strategy
• If there is insufficient depth in the spot market or market makers prefer to provide shorts in the perpetual market, the contracts are more likely to 'discount'.
• Large arbitrageurs may sell AERGO on the spot market while simultaneously buying on the perpetual market to lock in price differences and earn continuous funding fee returns.
3. Project Fundamentals and News
AERGO's recent lack of positive news, on-chain data, or ecological progress can lead to insufficient confidence among bulls and exacerbate bearish pressure.
⸻———————————————————————
2. Current AERGO Negative Interest Rate Level (2 hours)
According to real-time data from Coinglass:
• Binance: -1.3794 %
• Bybit: -0.7172 %
• Huobi: -1.0655 %
Converted to an annualized rate (assuming settlement every 2 hours), it can reach hundreds or even thousands of percentage points, but attention should be paid to the impact of borrowing costs and margin interest.
⸻———————————————————————
3. Operational Opportunities and Strategies
1. Funding Rate Arbitrage
• Method: Borrow AERGO in the spot market and sell, while opening a long position of equal amount in the perpetual contract market.
• Yield: Every 2 hours, you can earn the current negative interest rate (approximately 0.7%–1.4%) as positive yield.
• Risk: Need to bear borrowing costs, fluctuations in funding fees, and forced liquidation risk, and ensure both sides' positions are always properly hedged.
2. Pure Long Yielding
• If bullish on AERGO in the medium to long term, one could only go long in the perpetual market and hold positions to earn funding fees paid by bears.
• Also control the leverage ratio and margin level to avoid forced liquidation when the market reverses.
3. Reverse Bottom-Fishing Strategy
• Continuous high discounts often indicate excessive pessimism in the market, which may present opportunities for a rebound from overselling.
• After buying low on the spot market, look for opportunities to close shorts or open long contracts to enjoy dual benefits of price recovery and narrowing discounts.
4. Cross-Platform Monitoring and Switching
• The interest rate levels vary slightly between different exchanges; choose the optimal exchange to execute strategies.
• Timely review and dynamically adjust margin and positions to prevent a sudden adjustment of rates or risk parameters on a particular platform.
⸻———————————————————————
4. Risks and Precautions
• Interest Rate Fluctuations: Negative interest rates are not fixed and may quickly reverse with market sentiment.
• Borrowing Cost: The borrowing rate on the spot side may eat into some of the funding fee returns.
• Forced Liquidation Risk: Delayed hedging or using excessively high leverage can lead to significant losses when the market reverses.
• Compliance and Platform Risk: Ensure the selected platform's security.
——————————————————————————
Summary: The ongoing negative interest rates of AERGO perpetual contracts reflect a market atmosphere dominated by bears, but this also provides considerable 'negative yield arbitrage' and reverse bottom-fishing opportunities for traders skilled in hedging and risk control. Choosing a robust hedging strategy and strict risk management is key to obtaining profits in this environment.
