*This post has been written by Hedgehog, an MCS influencer and one of Korea's famous cryptocurrency key opinion leaders.
Greetings from MCS, the derivatives trading platform where traders ALWAYS come first.
Cryptocurrency traders are realizing valuable profits through intense trading in their own way. The strategy I am going to share with you is not complicated and may not be the best strategy, but it is a way to trade Bitcoin that is 100% profitable.
🎯 What are Funding Fees?
If you want to trade in bitcoin with 100% profitability, you must first understand the concept of funding fees of perpetual contracts. Due to the nature of Bitcoin perpetual contracts, as it it is a futures product with no expiration date, the gap between the spot price and contract price is closely maintained through funding fees. In simple terms, the funding fee is paid or received once every 8 hours each day to prevent the price of the MCS BTC/USDT perpetual contracts from diverging excessively from the spot price by that can occur due to higher demands in shorts or longs.
For more details regarding funding fees, please find the helpful links below.
Funding Overview : https://help.mycoinstory.com/hc/en-us/articles/360041059811-Funding-Overview
🎯 Bitcoin Trading Strategy with 100% Profitability
Once MCS traders have a complete understanding of funding fees, you can start trading Bitcoin with 100% profit. This trading strategy is called the 1x Short Strategy. Due to the nature of the Bitcoin perpetual contract inverse product, if I take a 1x short position, my bitcoin quantity will vary depending on the bitcoin price, but strangely my assets will remain constant. In this situation, if you receive funding fees, you will continue to accumulate huge interest.
If you are new to the 1x short strategy, you may have not resonated with the details above. I will now explain the details one by one below.
👉 How Can My Assets Be The Same When The Bitcoin Quantity Fluctuates?
The above chart is a shows the BTC profit and loss when entering the 1x short position with 1 BTC at 10,000 dollars (blue line) and holding 1 BTC as it is (red line). When 1 BTC is held as it is, the amount of BTC does not change depending on the price change. However, if I took a 1x short position with 1 BTC for 10,000 dollars, my BTC profit or loss will fluctuate as shown in the in the blue line according to the change in BTC price. You don't have to worry too much if a 1x short position generates BTC profit or loss. Let's look at the chart below.
In the chart above, the blue line is a position of 1x short with 1 BTC at 10,000 dollars, and the red line is just holding 1 BTC. In this chart, you can see how the value of the asset changes according to the price change. In a glance, you can see that the value of 1 BTC changes according to the price changes. Surprisingly, the blue 1x short position line stays stable in value.
I believe that the more experienced MCS traders realized why the value of the 1x short remained constant. However if you encountered this for the first time, it may be a little difficult to understand. For everyone who did not completely understand, I will explain the 1x short strategy with an example.
Suppose Hedgehog has 1 BTC in his MCS account and the current BTC price is $10,000. Hedgehog entered 10,000 short contracts with 1x leverage at $10,000 using 1 BTC as margin. Then this can be organized as follows.
Hedgehog's Original Capital = 1BTC
Hedgehog's Original Fiat Capital = $10,000
Over time, the price of Bitcoin has reached $15,000. Many traders believe that for a short position, if the price increases, there will be a loss. However there is an exception for 1x short positions. Hedgehog's BTC quantity and asset value can be summarized as follows.
Short Position PNL Equation = (1/Average Closing Price - 1/Average Entry Price) * Quantity
As time has passed, the Bitcoin price is assumed to be $15,000, so the average end price = $15,000
Since Hedgehog entered 10,000 short contracts at $10,000 with 1x leverage, average entry price = $10,000, contract quantity = 10,000 contracts
If substituted, (1/15000 - 1/10000) * 10000 = -0.33333333BTC
Hedgehog's loss in BTC is -0.33333333 BTC.
Hedgehog's current BTC Holdings = 1BTC - 0.33333333BTC = 0.66666667BTC
Hedgehog's Asset Value = 0.66666667BTC * $15,000 = $10,000.00005
Wait What‼️ Although the amount of BTC decreased, the price of bitcoin increased by the amount of lost BTC, and the asset value of Hedgehog remained the same.‼️
It is the same in the scenario when the bitcoin price falls. In the case of a 1x short position, if the bitcoin price falls, the amount of BTC increases accordingly, but the bitcoin price decreases, so the asset value of Hedgehog remains at about $10,000. Do you now understand how the 1x short strategy freezes the asset value?
Let's move onto the 2nd question.
👉 But Receiving Funding Fees For Short Position Isn't Guaranteed
If you have clearly established the concept of Funding Fee, you may think "Funding isn't always paid by longs". Funding fees are in some cases paid by longs and some cases paid by shorts. However, if you look at the major cryptocurrency derivatives exchanges Bitmex, Bybit, and MCS, if 90 funding fees are settled per month, more than 95% of them are statistically paid by long positions.
If you look at the two tables above, it shows the funding settlement history of BTC/USDT Perpetual Contracts on MCS. Since the first launch of MCS on June 15, the funding fee has been settled about 171 times. If you don't believe my words, you can check the MCS funding details directly through the link below.
MCS Funding Details : https://mycoinstory.com/contract/funding-history
Some of the world's major banks already have zero interest rates, and many are heading towards zero interest. The Korean bank installments are also 3-4% per year at best, and if you do not pay installments for a long time, you will also have to pay taxes. So I started to take a 1x short installment at MCS. In addition, since the interest on the funding fee comes in every 8 hours, real-time compounding is also possible.
In particular, if you look at the funding history on July 28th, you have received an interest of 0.22% in one day. To expand the timeframe, that would be 6.6% of interest for the entire month and 79.2% per year!!! 79.2% INTEREST!! Moreover, if you keep increasing your 1x short position with real-time compounding, this is a risk-free, unconditional way to trade Bitcoin.
Try risk-free trading after familiarizing yourself with the 1x short strategy.
I am a Bitcoin margin trader, Hedgehog. Thank you for reading this post.
*For convenience purposes, trading fees and withdrawal fees are not included in the example of 1x short strategy in this article. The captured image of is an account Hedgehog actually holds with the 1x short savings.
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