What is Funding rate?

The funding rate is a periodic payment exchanged between long and short holders of a crypto perpetual future that keeps its price tethered to spot. Positive funding means longs pay shorts (the market is crowded long); negative means shorts pay longs (crowded short).

How to read it

A small positive rate is normal. Sharply positive funding + price stalling = an over-crowded long ripe for a long squeeze. Sharply negative + price holding = trapped shorts, a short-squeeze setup.

FAQ

Is positive or negative funding bullish?

Neither by itself. Funding measures crowding, not direction. Extreme readings flag which side is vulnerable to a squeeze.

How often is funding paid?

Usually every 8 hours on most exchanges, sometimes hourly.

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