Brother Jiang has a friend named Old Jin, a man in his forties, originally from Guangdong, starting out in building materials. In 2018, he stumbled into the crypto world, and with a stroke of luck, the few Bitcoins and Ethereum he held became 'gold nuggets'. By mid-last year, when he calculated, wow! Excluding the losses from altcoins, just these two big ones could have been worth nearly a million at the then market price! Old Jin's heart surged with excitement.
Like all those who made money, he pondered: 'How can I make this money multiply?' The coin price was jumping up and down; should he sell all and convert to RMB? Thinking of the bank interest and the limited investment channels in the country, he just couldn't get excited. At that moment, he came across a post from a big V called 'Deep Valley Long Wind' in a place he frequented called 'Safe Haven Crypto Community' (sounds safe and reliable, right?), and it hit him right in the heart:
‘The secret to making big money in the crypto world! Got 1 million USDT? Let me teach you a trick of 'perpetual arbitrage', easily 100%+ annualized! Simple and straightforward operation, zero risk!’
What specific trick? The post lured like this:
Buy 1 million worth of a 'mainstream coin' (for example, Ethereum ETH).
Transfer all this batch of spot ETH to the contract account.
Open a coin-based perpetual contract (ETH/USDT), short with one-time leverage (1X Short).
A miraculous thing happened: Theoretically, this locked in your ETH-based value! The coin fell? The short position made money! The coin rose? You earn more on the spot! Hedged! Most importantly, you can steadily earn the 'funding fee' from the contract market, which is currently yielding alarmingly high, calculating to over 120% annualized earnings! You will never get liquidated!
Under the post, there were a bunch of comments like 'Big boss is awesome!', 'Learned it!', 'Thanks for sharing the treasure strategy!'. Old Jin read it dry-mouthed, 120%! Is this not a thousand times better than putting it in the bank? Not a hundred times better than blindly operating and staring at the K-line every day? 'Perpetual', 'hedging', 'never getting liquidated', 'easy money'—these words crawled in his heart like little ants, itching. That 14% interest? Instantly became garbage.
Who is Old Jin? He has been through the ups and downs of business for over a decade and is very bold. He thought to himself: 'Go! Fortune lies in danger!' Following the 'secret', he chose ETH, which at the time looked 'stable', and went all-in, securing 1 million worth of ETH. Then, he transferred to the contract platform, took a deep breath, and clicked that magic button: '1X ETH/USDT Short'.
In the first few days, everything was calm. Old Jin refreshed his contract account frequently, watching the 'unrealized profit and loss' fluctuate between a few and dozens of USDT, almost negligible. Then he looked at the 'funding fee income', wow! Every 8 hours, he was earning several to dozens of dollars! Converting to daily and annual rates... wow! It really seemed like it was heading for an annualized rate of over 100%! Old Jin felt like he had found the 'money printing' BUG in the crypto world! He half-boasted and half-mysteriously said in the group: 'Hehe, just playing a little arbitrage game, making some pocket money.' He happily calculated: '120 million interest a year, in ten years I'll be financially free!'
The beautiful dream shattered in an instant.
Old Jin selectively ignored the inconspicuous small print at the bottom of 'Deep Valley Long Wind's' post: 'This strategy relies on a continuously positive funding rate environment.' What does 'positive funding rate' mean? Simply put, it means that most people in the market are frantically going long on ETH, and the platform forces those who go long to pay those who go short (like Old Jin) to balance, which is how the 'easy interest' is generated.
However, there is an old saying in the crypto world: 'When the funding rate is high, either the market is about to crash, or it will go crazy!'
Old Jin enjoyed less than a month of 'stable returns', and the situation suddenly changed. At that time, there were rumors that the U.S. SEC might approve the ETH spot ETF. This news was like dropping cold water into a boiling pot of oil—the market exploded! ETH began a crazy surge like bamboo shoots after rain! Within a week, the price jumped from around 2000U when Old Jin opened his position to nearly 3000U! This was not a gentle rise; it was a rocket launch!
What was Old Jin doing? He was still dreaming of arbitrage. In the first two days, it rose a few hundred dollars, and his account looked like this:
Spot ETH: Soaring! Massive unrealized gains!
Short contract: Plummeting (huge losses)!
What about the theoretical 'hedging lock-in'? Reality instantly shattered it!
Deadly issue 1: Margin ratio! Losing on a short contract requires using up margin! Old Jin's one-time short position, during ETH's crazy surge, experienced rapid losses. A 1 million worth of ETH, making a one-time coin-based short, when the coin price rose to 3000U (a 50% increase), his theoretical loss on the short position reached a terrifying 50000 USDT! (Because the opening short price was 2000, and the current price was 3000, losing 1000 dollars per ETH). The margin he used to support this short position in his contract account (which is that batch of spot ETH) did indeed increase in value, but the contract platform has a 'maintenance margin rate' mechanism!
One afternoon at 2 PM, just when ETH hit a new high for the day, Old Jin's phone suddenly exploded with app alerts! The glaring 'Risk Warning: Your Margin Ratio is Below Maintenance Level!' followed by an even scarier second alert: 'Liquidation Warning! Your position may be liquidated within X minutes if no additional margin is added!'
Old Jin was stunned! Wasn't it said 'never getting liquidated'? He hurriedly clicked into his account. In that moment, his heart nearly stopped: his contract account's net value (total account value minus short position losses) had dropped to the platform's 'minimum maintenance margin rate' red line! Because the increase in spot value (the value of collateral increased) couldn't keep up with the speed of losses from the short position! This was still at 1x leverage! If it were a higher leverage, he would have been liquidated ten times over!
Did he want to add margin? But where would he get extra money? His entire fortune of 1 million was all in there!
Did he want to close the position? The market was surging crazily; closing a short position means buying at a high level (closing a short is buying), which would instantly worsen the losses! The entire account would be further exacerbated.
During the more than ten minutes of his hesitation and struggle, the ETH price surged up again! The system's cold alert sound rang out:
‘Your ETH/USDT Short position has been LIQUIDATED.’
‘Liquidation Engine executed at $3024.50.’
Old Jin's vision went black.
‘Perpetual arbitrage’? ‘Never getting liquidated’? 120% annualized?
The ending is stark:
The short position was forcibly liquidated: unplugged at a high of 3024 dollars.
Massive losses solidified: The liquidation price was far above the 2000 he opened his position at, even higher than the then spot price (which could be around 2800), and he was forcibly liquidated at the worst price. Just the short position alone, a blood loss of over 50% of the principal was a foregone conclusion!
Is the spot still there? Yes! But this batch of spot ETH is used as collateral for the short position. The losses from the short position are directly deducted from the value of his collateralized spot! So, the number of ETH in his account didn't change, but a part of the value of ETH had already been taken by the system to fill the gap of the short position! It’s equivalent to his ETH being 'bought back at a high price', instantly evaporating nearly half of its value! 1 million? Now the total value of the account is just over 500,000. It's like going back to square one overnight!
Old Jin slumped in his chair, speechless for a long time. The post by 'Deep Valley Long Wind' in the group, he later realized, had long been deleted. The so-called 'Safe Haven' ultimately became a shark's mouth that devoured gold. That 14% interest became a luxury; now he had lost half of his 'capital'.
Later, Old Jin got drunk and pounded the table, saying to me: 'What bullshit hedging! What never getting liquidated! It's all nonsense! When the market experiences extreme one-sided conditions, all theoretical models are made of paper! The platform won't give you time to react; their 'risk management' is to use your life to 'manage'! One-time leverage? It'll blow you away without a trace! No matter how high the funding rate, it can't stop the losses from being cut in half! That 120% annualized? That's the money I was given by the king of hell to buy my life!'
Back to the question: Earned a million, all put in USDT for interest (even at 14%)?
I tell you, Old Jin proved with blood and tears that:
That 14%, looking beautiful, do you know where it comes from? Either from lending (who are you lending USDT to? What if the project party collapses?), or from mining (impermanent loss in DEX + risk of falling coin prices is enough to make you drink a pot). This yield hides invisible landmines behind it.
As for that 'never getting liquidated 120% arbitrage'? Just listen, that’s like doing ballet on a fire pit! It only might make a little money under very special, ideal market conditions (narrow fluctuations + continuous and stable high positive funding rate). Once the market goes crazy (with a clear and strong upward or downward trend), that little margin you have is as fragile as an eggshell in front of the platform's 'forced liquidation rules'! 'Never getting liquidated'? It's just a theoretical lie! The ending is a reference to Old Jin—quick, fierce, and painful!
The real choice?
Old Jin later sobered up and said: 'What a hot potato it was to really earn that 1 million; the dumbest thing was thinking of 'still doing financial management to lay golden eggs in the crypto world'! The bigger the heart, the deeper the pit! The most secure method? Think of every possible way to turn it into solid legal RMB in the bank! The process may be slower, messier, and more expensive, but I can sleep at night! Don't keep longing for that enticing interest; with capital, everything has hope! Without capital, interest is like wild grass growing on a grave; no matter how lush, it has nothing to do with you!'
#特朗普加密新政 #比特币流动性危机 #美SEC批准流动性质押
The core truth: Rolling positions are essentially a probability game—using a 5% position to test and let 200% profit trades cover 10 stop losses, where math crushes emotions. Follow @crypto姜哥 to get daily volatility alerts; the next wave of 10x opportunities is on the way!