Bitcoin Forum

Dear pro.BTCC.com,
Since several days,  the funding rate is frozen in the opposite direction of what it should be now.
We must avoid this market being so far from the real prices making the situation gradually increasingly bad for LONG order.

1.
Please fix the interest rate soon. 
(why isnt it set according to  a formular any more like https://pro.btcc.com/faq "How do carrying fees work on Pro Exchange?")


2.
Please also correct in retrospective for the last days:  
Refund the funding deductions on Long positions (bitcoin buyers) and credit those that would have applied otherwise
(and check if the price and/or the charges caused any liquidations that would otherwise not have happened)


Introduction/Context:
https://pro.btcc.com/trade/xbtcny
  allows trading bitcoin contracts (with high leverage)

In volatile times such a market must be well hedged,  either through the market provider
- or through incentivizing users and the public to balance the market themselves.

When Price is too high ('premium') => positive interest rate  => sufficient incentive for more sellers to decrease the price
and when price  Discounted price => negative interest rate =>  sufficient incentive for more buyers to increase the price

(This explains the radical changes/swings in interest at Bitmex, for example
https://www.bitmex.com/app/index/.XBTUSDPI8H
Bitmex is not yet officially hedged but still the rates keep the price correct most of the time. )


pro.BTCC.com seemed to balance the market / incentivize similarly  
- until recently when the interest rate just froze,
charging buyers despite the now the prices are only getting lower.

https://i.imgur.com/QZyZXRr.jpg

to be clear, i am not complaining about some spread or the lack of a market maker,
but about inducing a disbalance, by no more changing the funding rate.
That is as of now already resulting in several % discounts on the bitcoin price!


For example imagine you buy bitcoin at 4000 CNY ( $600 ) leverage 20x,  margin 5%
and 10 days later the bitcoin price is still $600.
Then the situation is about this:  you pay fixed interest rate 10*0.14%/day. 3.6% margin left.
Say at the same time the market drifts further down further by 3%, or so, compared to the real bitcoin price,
(because sell orders keep coming since they are incentivized but other Long orders escaped the disbalance market in fear already.)
- Then Your order is liquidated and money is gone.

Instead fair balance is normally reached, without need to hedge, like this:
You buy.  Market price shifts up leaving a 0.5% gap/premium to the average. Then you ideally also have to pay 0.5% interests, since once you sell you can get them back...
Then tomorrow the price shifts back down by 1%. From " too expensive by 0.5%" down " too cheap by 0.5%"
So tomorrow you gain 1%, paid by the short orders, who decreased the price
 - Simple math.

(- Or alternatively the market provider could charge for example 0.0123%/day fixed,
but in turn take full responsibility for keeping the price tight at almost the the same level as the real bitcoin price.)

https://forum.bitcoin.com/post26116.html#p26116