Binance announced new rules for funding rate changes last night.

Once the rate cycle reaches the upper or lower limit, the settlement frequency will immediately change to once an hour.

In simpler terms: as long as the rate hits the ceiling, it will automatically convert to funding rate once per hour.

Here’s the explanation:

Recently, the market has often seen altcoins with maximum negative rates but rising against the trend.

Why are maximum rates rising? 1. Many short sellers had a positive rate when they opened their positions, but suddenly the rate turned negative, leading them to close their short positions due to unbearable rates, resulting in a long position and a price increase; 2. With negative rates, many people go long to take advantage of the rate, causing a price increase; 3. Whales manipulate low market cap assets, driving prices up and squeezing shorts to gradually sell off.

Taking the recent spike in $ALPACA on Binance as an example, it showcases a case of low market cap and high contract holdings, manipulated by whales to explode the short positions.

Under Binance's new funding rate rules, short sellers who can't bear the maximum funding rate charged hourly will accelerate their liquidation, leading to a rapid short squeeze. Thus, the speed of price increases for low market cap altcoins will quickly accelerate, and the pace set by whales will also speed up.

In the past, many have focused on low market cap coins with increasing contract holdings, hoping to ride the trend when open interest shows unusual activity and make a profit with the whales.

It is uncertain whether this strategy will still be viable after Binance changed the funding rates; even if it is, the market trend will definitely move much faster.