SKR funding rates dropped further into negative territory over nine minutes. Traders betting on price drops are paying an increasingly heavy fee to hold their positions.
Imagine SKR is trading at around $0.025. A heavy imbalance of traders enters the market, all attempting to profit from an immediate drop in price.
Across a nine-minute stretch, the fee sellers had to pay grew ten consecutive times, stretching from minus 0.321 percent down to minus 0.338 percent every hour.
To keep markets balanced when almost everyone bets the same way, the crowded side pays cash directly to the opposing side. This regular balancing payment is called the funding rate.
Paying steep fees every hour bleeds cash from sellers. If the price fails to fall, these sellers may rush to exit at the same time, creating rapid buying pressure known as a short squeeze.
An extreme negative rate does not guarantee prices will bounce. Strong selling pressure can easily continue pushing the price down further despite the costly fees.
Do not think deeply negative funding means the price must rebound. Think of it as a crowded room paying an expensive hourly fee to stay inside, making any sudden exit volatile.