$ENSO Review - Funding Rate Trap

Bought in at 0.988, now at 0.9773, losing 1 point. The most painful part is that it once reached 1.0932, with an unrealized profit of 10 points, but I didn't sell, now it turns into a loss. That’s the cost of greed.

At that time, I saw the funding rate at -0.1975%, short sellers were paying money, thinking it was a short squeeze structure. But I overlooked a critical issue: open interest (OI) had been flat, and the funding rate narrowed from -0.1975% to -0.0031%. This isn’t a short squeeze; both longs and shorts were withdrawing. The real short squeeze occurs when OI surges + the funding rate is negative, not when OI is flat + the funding rate narrows.

I shouldn’t have opened this position; the signal quality wasn’t enough, but I forced it. Now, with OI flat and the funding rate close to zero, it’s a dead water market. If it can return to around 1.01, I’ll cut my losses and exit. If it continues to break below 0.97, I’ll accept the loss and stop out. No more waiting.