The funding rate is a periodic payment exchanged between long and short holders of perpetual futures. Positive funding normally means longs pay shorts; negative funding means shorts pay longs.

The mechanism helps keep a contract with no expiry close to its spot index. It also shows which side is paying at each settlement, though it does not count how many traders hold that view.

Why perpetuals need funding

A dated future converges towards spot as settlement approaches. A perpetual has no settlement date, so exchanges use a payment linked to the contract’s premium or discount and an interest component.

Formula, caps and settlement intervals vary by venue and contract. Compare annualised or interval-matched rates before combining exchanges.

What extreme funding means

Strongly positive funding makes long exposure expensive to maintain at settlement; strongly negative funding makes short exposure expensive. That is evidence of an imbalanced premium, not a guaranteed reversal.

The same rate matters more when open interest is large. Funding shows the price of holding one side; open interest shows how much contract exposure is open.

Why negative funding stands out

Bitcoin perpetuals have often carried mildly positive funding during constructive markets, so sustained negative funding is less common. It can reflect defensive positioning, hedging or a contract trading below spot.

Rare does not mean bullish by itself. Negative funding can persist during a severe decline, and venue-level differences can be large.

How to read it

Strongly positive. Longs pay shorts at a high rate for the stated interval.

Positive. Longs pay shorts.

Near zero. Little funding changes hands at the next settlement.

Negative. Shorts pay longs.

Strongly negative. Short exposure is expensive to maintain at settlement.

Funding rates update inside the Futures dashboard, with venue, interval and open-interest context.

Common questions

Who pays funding?

On the common perpetual model, traders pay each other: longs pay when funding is positive and shorts pay when it is negative.

Does high funding mean price will fall?

No. It means holding the paying side is expensive at settlement. Crowded exposure can persist or unwind.

Why do venues disagree?

They use different order books, index prices, formulas, caps and settlement intervals.

How should rates be compared?

Put them on the same time basis and check whether the displayed rate is current, predicted or already settled.

How does funding relate to open interest?

Funding is the payment rate; open interest is outstanding contract exposure. Read together, they show cost and scale.