Funding rates are an often overlooked yet vital aspect of the crypto market. These rates are essential in perpetual futures contracts — financial instruments that allow traders to bet on Bitcoin’s price without an expiration date.
Funding rates help align the price of these contracts with the actual market price of Bitcoin through periodic payments between buyers and sellers. Buyers pay sellers if the rate is positive, showing a bullish market mood. Conversely, a negative rate indicates bearish sentiment, with sellers paying buyers.
Funding rates show the market’s leverage direction and overall sentiment. High funding rates suggest a strong bullish sentiment, with traders willing to pay more to hold onto their bets for rising prices. Meanwhile, low or negative rates hint at a bearish outlook, where expectations lean towards a price drop.
According to CoinGlass data, the open interest-weighted funding rate of 0.0921% and the volume-weighted funding rate of 0.0942% showed a high co
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