A quick note: $SIREN ’s current funding rate is +0.0893% (settled every 4 hours), with longs paying. A simple annualized estimate based on this period is about 195.6%.
People often ask how to interpret funding rates, so here’s my take.
The annualized figure is just a simple extrapolation of this period’s rate over a year. Rates change every period, so don’t treat it as a guaranteed annualized figure.
The further the rate deviates from normal, the more crowded one side’s positions are. If the price reverses, the risk of cascading stop-losses also increases.
The same data can mean very different things in different market conditions, so don’t blindly apply a single rule.
People often ask how to interpret funding rates, so here’s my take.
The annualized figure is just a simple extrapolation of this period’s rate over a year. Rates change every period, so don’t treat it as a guaranteed annualized figure.
The further the rate deviates from normal, the more crowded one side’s positions are. If the price reverses, the risk of cascading stop-losses also increases.
The same data can mean very different things in different market conditions, so don’t blindly apply a single rule.