What are crypto funding rates?

These rates vary as asset prices turn bullish or bearish and are determined by market forces. Additionally, crypto funding rates also differ across exchanges - on some exchanges, these rates remain persistently high. In contrast, others like Binance Futures maintain a low funding rate.

What is funding rate?

The funding rate amount is based on the difference between the perpetual contract market and spot prices. So, depending on the traders’ position, they can either stand to pay or receive the funding rate. When the funding rate is positive, the price of the perpetual contract is greater than the mark price.

What is the funding rate of deribit crypto exchange?

Deribit crypto exchangecharges a maker and taker trading fee of 0%and 0.05%, respectively, on crypto perpetuals. Like most of its peers, the funding rate is calculated and paid out every 8 hours. The funding rate calculation is as follows: Funding Payment= Funding Ratex Position Sizex Time Fraction

Is bitcoin funding rate too high?

On social media you might have heard traders talking about funding rate or funding fees. “The next funding is highly negative, upcoming short squeeze.” “Bitcoin funding rate too high, a dump is imminent”. Funding rate is a common mechanism that is only seen on trading platforms that offers perpetual contracts.