$LA ｜Rate -0.206%｜Shorts pay funding
Before looking at positions, understand the funding rate.
Funding is calculated by multiplying the position’s notional value by the rate: for a position with a notional value of 10,000 U, a rate of 0.01% means 1 U is paid or received per funding interval.
A deeply negative rate sometimes occurs when shorts are overly crowded. The commonly cited risk is a short squeeze, but that’s only one possibility.
Extreme readings usually signal greater volatility. At such times, it’s better to scale back positions rather than make a big bet.
Before looking at positions, understand the funding rate.
Funding is calculated by multiplying the position’s notional value by the rate: for a position with a notional value of 10,000 U, a rate of 0.01% means 1 U is paid or received per funding interval.
A deeply negative rate sometimes occurs when shorts are overly crowded. The commonly cited risk is a short squeeze, but that’s only one possibility.
Extreme readings usually signal greater volatility. At such times, it’s better to scale back positions rather than make a big bet.