When the funding rate hits an extreme, I start to get itchy, but most of the time I hold back. To put it simply, an extreme funding rate = emotions have been squeezed to the side. The opposing side of the trade is obviously tempting, but you also don’t know how long these emotions can be sustained. If the market really goes crazy, rational accounts will be the first to be taken out.

Right now, I lean more towards two approaches: either completely avoiding volatility and waiting until the funding rate returns to a less outrageous level; or using only a small position to hedge, thinking “exchanging time for mean reversion,” rather than betting on an immediate reversal. The kind of inflation + studio + coin price spiral in blockchain games is actually very similar to extreme funding rates: it looks very certain, but when it crashes, it’s unreasonable. Anyway, I’d rather miss out than hard hold through it. That’s it for now.