The **funding rate** on perpetuals is the cost of keeping a position open in a contract with no expiration date. It works as a balancing mechanism: when the market is very bullish and there are more longs than shorts, the funding rate is positive, and those who are long pay those who are short. When there are more shorts than longs, the funding rate turns negative, and shorts pay longs.

That payment is settled every 8 hours on most exchanges. If the funding rate is high and positive, it means the market is overheated on the long side, which could signal an imminent correction. If it is extremely negative, it may indicate excessive pessimism and that the price is near a bottom.

Today, with Bitcoin down 2.12% following the inflation data and being rejected at 84K, the funding rate is becoming a key metric. If it remains positive despite the drop, it means traders are still betting on a rise and aren’t closing their positions. That could lead to a cascade of liquidations if the price keeps falling and hits the accumulated stop-losses.

The funding rate doesn’t predict the future, but it shows you the market’s bias in real time. When most traders are betting in one direction and the price moves against them, forced liquidations amplify the move.

Do you check the funding rate before opening a position, or do you only look at the chart?

#FundingRate