How to Read Crypto Funding Rates
Read positive/negative funding, annualized cost, crowded positioning and holding-cost implications.
What Funding Does
Perpetual futures have no expiry, so periodic funding payments between longs and shorts help keep the contract near spot. Positive funding usually means longs pay shorts, while negative funding usually reverses that. Frequency and formulas vary by venue.
High Funding Is Not an Instant Reversal
High positive funding signals crowded longs and rising carrying cost, but it can persist in a strong trend. Use it as a risk thermometer alongside price, open interest and liquidations—not as a standalone short signal.
Convert to Real Carry Cost
Multiply the per-period rate by settlements per day and expected holding days to estimate carry. Annualization is for comparison, not a forecast. Cross-venue arbitrage must also include fees, slippage, margin and transfer risk.
