Christmas Vacation
I've been enjoying my time off but it's been way too long.
Just thought I'd pop in to give a PSA on the state of Hive perpetuals.
Binance listing
Hive got a pretty big pump earlier this month when Binance listed a Hive/USDT perps market. Of course those of us who know how Hive likes to pump and dump have been using this opportunity to short the market in anticipation of the immediate crashes that we so often encounter. However now the trade has become extremely overcrowded and the funding rate is screaming that Hive is going to pump again despite having just pumped.
Shorts are getting fleeced
This morning the cost to short Hive reached a record-breaking low of -2%, which is absolutely unheard of. This means anyone that was shorting Hive at 7 AM EST lost 2% of their stack immediately. For reference the "billing cycle" for these perps is 4 hours (twice as much as the 8 hours for bigger markets), Meaning that if this 2% was somehow sustained that would imply that shorts were paying the longs 4,380% APR... which is better than most of the yields during DEFI 2020 peak hype cycle. Since then it's collapsed quickly back down to around -0.45% at the moment... but even that is around 1000% APR.
Do not bet against the funding rate
There's a very high chance that Hive users who are shorting the token have no idea they are getting absolutely wrecked by the funding rate right now. I've setup a long position on MEXC just to capitalize on these yields while they last. I never bet against the funding rate and that strategy has served me quite well up until this point.
My current position is x2 long using $2600 USDT... so if Hive were to crash 50% I'd lose it all... which can easily happen but I don't imagine it will with yields like this. It's also possible to make the position "risk free" by adjusting it to x1 long just to farm these insane yields, which is undoubtedly what market makers are doing right now. This yield is just too juicy to pass up, which would normally imply that we will pump again and bust all these shorts, but you never know with Hive.
Conclusion
I was supposed to post this a lot sooner in the day because the funding rate is crashing quite quickly. However it's still at -0.4% at the moment which is 876% APR. I'll have to close my risky-ish position once it gets much closer to zero.
Consider this a PSA to anyone who has an active short on Binance or MEXC how has no idea who much money they are paying the shorts right now. It's very difficult to make money with an APR that high chipping away at your stack every 4 hours. The only option to short in this environment is to sell spot. Be careful out there.