When funding rates turn ridiculously negative


Today, NIL rate is -0.28%, meaning shorts have to pay longs 0.28% every 8 hours.
What does this mean? If you short 10,000 U of NIL, you lose 28 U every 8 hours.
A day’s loss is 84 U. A month’s loss is 2,520 U—holding a position without moving loses 25%.
This is why extremely negative funding rates often signal a short squeeze: shorts can’t hold on, forced to close positions and buy back, pushing the price higher and higher.
I’ve seen a -0.5% rate, and by then, the person holding the short was already mentally broken.
But at the same time, it’s important to note—extreme rates are unsustainable.
After NIL rises 50%, once the rate normalizes, it’s a waterfall.
So, with NIL now, either don’t touch it, or go in and out quickly.
NIL-7.59%
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