Funding Rate – Simple Explanation
In crypto perpetual futures (like BTC/USDT perpetual), the funding rate is a small payment exchanged between traders to keep the futures price close to the real spot price.
How it works:
• Positive funding (+%) → Long traders (betting price will go up) pay short traders.
• Negative funding (–%) → Short traders (betting price will go down) pay long traders.
• Very high positive funding (e.g., +0.41%) means too many longs — strong bullish pressure.
• Very high negative funding (e.g., –2.00%) means too many shorts — strong bearish pressure.
Trading meaning:
• When funding is very positive, short positions can earn funding.
• When funding is very negative, long positions can earn funding.
• Always combine funding rate with price trend and risk management.
Funding rate affects your real profit or cost when holding perpetual futures, so it should never be ignored.
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