Genuine questions I have re the crazy high yields in crypto: Who is paying those sorts of funding rates? Why? Where is the money coming from?
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A lot of it is short term punting, i.e. holding for weeks to months. Many happy to borrow at 20% annualized for 1 month (i.e. pay 1.6%) for an asset which might be up 40% in a month.
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On top of that, there are lots of constraints that make it hard for traditional institutions to come in and compress yields. It's slowly happening, for now the crypto prop shops are earning insane yields.
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What's the best way monitor leverage in the Crypto space?
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But why? You can borrow the dollars for a fraction of the interest rate and just buy the crypto. Why borrow at 20% ?
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