Funding rate
The funding rate is a periodic payment between traders on a perpetual futures contract. When it is positive, longs pay shorts; when it is negative, shorts pay longs. It exists to keep the perpetual's price close to the spot price.
Funding right now
16:46 UTC| Perpetual | Per 8 hours | Annualized | 7-day avg | 30-day avg |
|---|---|---|---|---|
| Bitcoin | 0.0091% | 10.0% | 0.0059% | 0.0040% |
| Ethereum | 0.0087% | 9.5% | 0.0055% | 0.0037% |
| Solana | 0.0100% | 10.9% | 0.0062% | 0.0035% |
Positive funding means longs pay shorts. Next payment 00:00 UTC.
How it works
A perpetual future never expires, so nothing forces its price to meet the spot price at a fixed date the way a quarterly future does. Funding does that job instead. At fixed intervals the exchange compares the perpetual's price with an index of spot prices and charges one side of the market a small fee that goes to the other side.
- Perpetual above spot: funding is positive, and longs pay shorts. Holding a long gets more expensive and holding a short pays, which pulls the perpetual back down.
- Perpetual below spot: funding is negative, and shorts pay longs.
The exchange does not keep the payment. It moves directly between traders, in proportion to the size of each position.
Most large exchanges, including Binance, charge funding every 8 hours. Hyperliquid charges every hour. The rate is quoted per interval, which makes it look tiny, so it is easier to compare rates once they are annualized:
| Rate per 8 hours | Per day | Annualized |
|---|---|---|
| 0.01% (a common baseline) | 0.03% | about 11% |
| 0.03% | 0.09% | about 33% |
| 0.10% | 0.30% | about 110% |
| 0.30% | 0.90% | about 329% |
Annualized rate = rate per interval × intervals per day × 365.
A worked example
You hold a $50,000 long position in a BTC perpetual and funding is 0.03% per 8 hours.
- Each payment: $50,000 × 0.03% = $15
- Per day (three payments): $45
- Over 30 days: $1,350, or 2.7% of the position
Funding is charged on the full position size, not on your margin. With 10x leverage you posted $5,000, so the same $1,350 is 27% of your margin in a month. That is why extreme funding pushes leveraged traders out of their positions even when price is not moving against them.
What it tells you
Funding shows which side is crowded and how much that side is paying to stay in.
- Positive and rising: demand for leveraged longs is outrunning demand for shorts. The longer it lasts, the more of that demand is rented with leverage rather than owned in spot.
- Near the 30-day average: positioning is not stretched in either direction, and funding carries little information on its own.
- Deeply negative: shorts are crowded and paying to stay in. A rally that forces them to cover can move faster than the news behind it.
Extreme funding also attracts carry traders. When longs pay a lot, a trader can buy spot and short the perpetual, keep the position market-neutral, and collect the funding. That trade sells the perpetual and buys spot, so it pulls the two prices together and gradually brings funding back down.
When it matters most
Funding matters most when it is extreme and open interest is high. Then a lot of leveraged positions are paying a lot to stay open, and a small move against them can trigger liquidations that push price further, a liquidation cascade.
High funding on its own is not a sell signal. In a strong trend funding can stay elevated for weeks while price keeps rising. It describes the cost of holding a position, not where price goes next.
Common misconceptions
"High funding means the market will drop." Funding measures how crowded one side is, not timing. It can stay high through a long rally. What changes is how fragile the move is if it stalls.
"The exchange collects the funding." It does not. Longs and shorts pay each other; the exchange only sets the rate.
"0.01% is nothing." Per interval it is small. Annualized it is about 11%, and on a leveraged position the cost is multiplied against your margin.
"Every exchange has the same rate." Each exchange calculates funding from its own perpetual price and index, with its own interval and caps. Rates on Binance, Bybit and Hyperliquid are usually close, but they can diverge sharply during fast moves.