In the digital currency market, there has been a short squeeze recently, especially for digital currencies such as SOL, where the funding rate on major exchanges has reached a terrifying level. Among them, Binance's funding rate once soared to -969%, causing huge fluctuations and attention in the market. What kind of story is hidden behind this phenomenon? Let's explore it in depth.

In the digital currency market, SOL, as a highly watched cryptocurrency, has recently set off a short squeeze. As a result, the funding rates on major exchanges have also undergone unprecedented changes, especially the giant Binance, whose funding rate once soared to -969%, which is unbelievable. What secrets are hidden behind this phenomenon? We need to analyze this incident in depth and explore the reasons and impacts behind it.

 SOL short squeeze in the digital currency market

As one of the digital currencies that has received much attention recently, SOL has been highly sought after in the market. However, a short squeeze suddenly set off recently, causing violent fluctuations in the market. This short squeeze phenomenon makes people wonder what changes have taken place in the market that have led to the rampant short forces of SOL?

In the digital currency market, short squeezes are not isolated cases, but the scale and impact of SOL's short squeeze this time are extremely huge. The funding rates of SOL on major exchanges have risen sharply, which is shocking. Binance, a representative exchange, played an important role in this short squeeze. Its funding rate once soared to -969%, refreshing the market's perception of the terrifying funding rate.

 The impact of terrifying funding rates

The abnormal fluctuations in funding rates not only caused market fluctuations, but also had a significant impact on participants in the digital currency market. In such a market environment, investors often find it difficult to grasp market trends and are prone to panic. Especially when the funding rate soared to a negative level, it was unbelievable to investors, and market confidence was severely tested.

As a world-renowned digital currency exchange, Binance's abnormal fluctuations in funding rates have attracted widespread attention. The absurd figure of the funding rate soaring to -969% not only surprised market participants, but also made people begin to re-examine the risks and uncertainties of the digital currency market. The emergence of this terrifying funding rate has undoubtedly cast a shadow on the entire digital currency market.

 In-depth analysis and outlook

For the phenomenon of SOL short squeeze and terrifying funding rate in the digital currency market, we need to analyze it from a deeper level. This is not only a shock in the digital currency market, but also a test of market mechanisms and supervision. How to better regulate the digital currency market and avoid similar incidents from happening again is an issue that needs to be considered urgently.

In the future, the digital currency market will still be full of challenges and opportunities. As investors, we need to remain vigilant, treat market fluctuations prudently, and make rational decisions. It is hoped that with the joint efforts of regulatory authorities and market participants, the digital currency market will be more mature and stable, providing investors with a more transparent and fair trading environment.

In the turbulent digital currency market, the SOL short squeeze and terrifying funding rate incidents are just an episode in the development of the market. We should look at market fluctuations rationally with a calm mind and a keen eye, seize investment opportunities, and meet future challenges. I hope that the digital currency market can continue to develop and create more possibilities for investors.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

Coin Circle (120Btc.com): After the collapse of FTX, the price of Solana, which was once highly sought after by FTX founder SBF, fell sharply, falling below $10 last week and as low as $8, hitting a new low since February 2021. However, after Ethereum co-founder Vitalik Buterin tweeted last Friday to publicly encourage the Solana community and said that Solana has a bright future, the price of Solana has continued to rise sharply in recent days.

According to Tradingview data, Solana hit a high of $14.24 today. As of press time, it was reported at $13.8, a 17.1% increase in the past 24 hours. Compared with the low of $8.00 reached on December 30 last year, the highest increase in just six days was as high as 77%.

SOL chart

It is worth noting that Solana has experienced an astonishing short squeeze. According to Coinglass data, on major exchanges, SOL U-based contracts have experienced an astonishing annualized funding rate of -969%, OKX has reached -1181%, dYdX has reached -391%, Bybit has reached -842%, Gate.io has reached -822%, Bitget has reached -969%, and CoinEX has reached -1217%.

SOL U-based contracts have experienced an astonishing annualized funding rate

In response, David Alexander of Labs, the world's largest Binance venture capital department, pointed out that SOL derivatives activity has been very crazy recently. Since the collapse of FTX in November last year, it has seen the highest daily short liquidation volume, with more than $11 million in short positions liquidated in the past two days. He believes that this can be largely attributed to Vitalik's tweets and BONK's airdrop operations.

SOL contract liquidation volume

David
Alexander mentioned that despite the upward pressure on SOL prices, the base funding rate has become increasingly negative, almost in sync with the rise in SOL prices. The current funding rate has reached -0.70 on some exchanges, which is easy to become the most expensive short position compared to high-market-cap currencies such as BTC and ETH: From this perspective, traders who short SOL pay nearly 70 times higher funding rates than short ETH. This level of funding rate may upset these traders, so more volatility and liquidations are expected. However, it will be very interesting to observe how this affects SOL price movements in the short term and how much of the recent trading activity is truly organic.