1）
Recently, I was thinking about why some altcoins have risen so much in the sluggish market, from the earliest #YGG to#API3and now #LPT and #BLZ. These projects seem to be unrelated, but careful research still reveals some clues. Although I made money by buying the spot of these coins, the money made by some big guys through funding rates is more worth thinking about.
2）
Taking LPT, which has attracted the most attention in the past two days, as an example, let's speculate what reasons have driven its surge. According to statistics on LPT's 24-hour trading volume on Binance, the LPT/USDT spot trading volume reached 81.9 million U, the LPT/USDT contract trading volume reached 2.135 billion U, and the average contract position of LPT was about 80 million U.
The value calculated by the funding rate is: 8000 * 2.5% = 2 million U, multiplied by 3 per day is 6 million U.
3）
If more than 80% of LPT spot chips are controlled by hot money, and the remaining 20% are locked for a long time and cannot be traded, what would I do if I were hot money?
① First, borrow spot coins to prevent others from shorting.
②Then immediately hold a long contract.
③Using the funds obtained from the funding rate, continue to buy spot to push up the price and start to attract retail investors to enter the market. The contract begins to increase the funding rate, slowly eroding the short contract users.
4）
Then, steps ①②③ are executed repeatedly to gradually widen the price gap between spot and contract.
In this way, short positions are hurt by the high funding rate of -2.5% every 8 hours, and the spot price pushed up by the dog dealers and the market fomo, causing panic stop loss or liquidation. Under such strategies and market sentiment, short positions must be very uncomfortable if they do not stop loss and hold orders. They either have to keep paying funding rates or keep adding margin.
5）
The altcoins are easier to control in the secondary market. Only a small amount of funds is needed to manipulate the price, and the contract funding rate can be charged to ensure that the price will not fall temporarily. Therefore, the dealer pushes up the price, but the contract price cannot follow the rise. This is because not many people follow the contract, but the short sellers must pay the funding rate, making it impossible for the short sellers to resist for a long time.
After waiting for the short positions to be liquidated round after round, the market makers began to dump the stocks.
At present, #YGG and #LPT should be operated by the same hot money, and the methods of pulling up and smashing the market are similar. Once the currency that has been pulled up begins to plummet, it is a signal that the dealer begins to leave the market and gradually cash out. Do not chase the rise and sell the fall. If you can see this, please take the trouble to click three times with one click. Thank you for your support! #lpt #YGG $LPT $BLZ