✅ Funding rates, in plain English.
You buy Bitcoin on an exchange and hold it. Simple. No extra fees while you wait.
But there's another way to trade called perpetual futures, and there, a small payment happens every few hours between the two sides.
⬇️ Here's the idea: if way more people are betting the price goes up than down, the "up" side pays a small fee to the "down" side. That fee nudges things back into balance.
❓ Why you'd care: when everyone's excited and betting the same direction, you're paying that fee over and over, even if you're right about where the price goes.
Tiny each time. Adds up over days.
🗣️ It also tells you something: when the fee gets unusually high, it means the crowd is all on one side. Crowded trades tend to reverse hard.
You buy Bitcoin on an exchange and hold it. Simple. No extra fees while you wait.
But there's another way to trade called perpetual futures, and there, a small payment happens every few hours between the two sides.
⬇️ Here's the idea: if way more people are betting the price goes up than down, the "up" side pays a small fee to the "down" side. That fee nudges things back into balance.
❓ Why you'd care: when everyone's excited and betting the same direction, you're paying that fee over and over, even if you're right about where the price goes.
Tiny each time. Adds up over days.
🗣️ It also tells you something: when the fee gets unusually high, it means the crowd is all on one side. Crowded trades tend to reverse hard.
