AXS-USD Primed for Long Squeeze: Funding Rates Signal Imminent Drop
AXS-USD is showing strong indicators of a potential long squeeze. Extremely negative and stable funding rates on Paradex coupled with its current price near support levels suggest that further downside movement could trigger significant liquidations.
Key Metrics
Current Price
$2.612
Funding Rate
-6.5863%
24h Avg FR
-6.5863%
FR Trend
stable
Est. Liquidation Price
$2.22
Take Profit
$2.3507
-15%
Stop Loss
$3.7872
+45%
Max Leverage (No Liq.)
2x
100% ÷ 45% = 2x
Tradeable Exchanges
Analysis
AXS-USD is currently trading at $2.61, and the most striking indicator is the extremely negative funding rate of -6.586% on Paradex. This consistently negative funding rate, and the fact that it has remained stable suggests a strong imbalance where a large number of traders are heavily long the asset. The incentive for shorts to maintain their positions is unusually high, as they are receiving significant payouts.
This makes AXS-USD a prime candidate for a long squeeze. Should the price decline further, leveraged long positions could be forcefully liquidated. This triggers a cascading effect of selling pressure as more long positions are closed, rapidly accelerating the downside. Key price levels to watch are the immediate support around $2.50. Breaking below this level could catalyze a significant drop towards $2.00 or even lower.
Compared to other potential squeeze candidates, the sheer magnitude of the negative funding rate for AXS-USD stands out. While other assets may have negative rates, the -6.586% on Paradex is exceptionally high, indicating a highly crowded long trade. Open Interest data is not available at the moment. This absence adds additional unknown volatility to the scenario.
Historically, AXS-USD has experienced periods of high volatility and rapid price swings. These past events should inform risk management strategies if attempting to trade this potential squeeze. If we look at early 2023, similar long squeeze events occurred following extended periods of negative funding rates.
Risk Assessment
The primary risk associated with trading a potential long squeeze is the possibility of a short squeeze instead. If buyers step in to defend current price levels, those heavily shorting AXS-USD could be forced to cover, resulting in a rapid price increase. Key warning signs to watch for include a sudden spike in price coupled with a significant increase in trading volume.
Another risk factor is external market events. A positive catalyst in the broader crypto market could overshadow the negative funding rates and cause AXS-USD to rally against the prevailing trend. Always consider macroeconomic factors and unexpected news events that could impact market sentiment.
Finally, reliance solely on funding rates can be misleading. Monitoring Open Interest, order book depth, and social media sentiment are important supplemental analyses that can strengthen or weaken the Long Squeeze case.
Trading Strategy
For delta-neutral traders, a potential strategy is to use a combination of short futures positions on Paradex and long positions in other, uncorrelated assets to hedge against broader market movements. Short AXS-USD futures near $2.60 with a stop-loss around $2.75 to mitigate risk of a short squeeze. Take profit target would be around $2.00, with adjustments based on evolving market conditions and volume. Closely monitor Open Interest data if available for further confirmation.
Exchange Data
| Exchange | Price | Funding Rate | Open Interest |
|---|---|---|---|
| Paradex | $2.612 | -0.2744% | - |
Disclaimer: This analysis is for informational purposes only and should not be considered as financial advice. Cryptocurrency trading involves substantial risk and may not be suitable for all investors. Past performance is not indicative of future results. Always do your own research before making investment decisions.