Indicator Overview

The Funding Rates (BTC) indicator tracks the Annualised Funding Rate (AFR) for Bitcoin perpetual futures. The raw funding rate is fetched from the Binance and is annualised by multiplying by 365 and 100 to express it as a percentage. The result is plotted with the BTC spot price overlaid on a secondary logarithmic axis. Positive AFR values (paid by longs to shorts) signify excessive leverage and bullish sentiment, while negative AFR values (paid by shorts to longs) suggest excessive shorting and bearish sentiment. The unique insight is visualising market sentiment extremes through the gradient-coloured AFR line and area fill.

How To Use

The indicator uses horizontal lines at +5% AFR (Overbought) and -5% AFR (Oversold), acting as actionable signalling thresholds. When the AFR line crosses above +5%, it suggests the futures market is becoming overly euphoric and over-leveraged, potentially preceding a local top or a deleveraging event (long squeeze). Conversely, when the AFR crosses below -5%, it indicates significant short interest, often a sign of market capitulation or a local bottom before a potential short-squeeze rally. Traders can also use the integrated SMA or EMA to identify trend shifts: a change in the moving average's colour (from red to green or vice-versa) confirms a momentum shift in speculative sentiment.