$BIRB latest funding rate: -0.164% (settled every 4 hours). Shorts pay; simply annualized based on this period, that’s about 358.9%.
Let’s use this figure to break down the funding rate.
The rate mainly consists of two parts: the premium of the perpetual contract over spot, plus a base interest rate component. When the premium is small, most contracts settle at around 0.01% every 8 hours.
Funding rates typically return to normal either because prices correct or because one side of a crowded trade exits. To tell which, you need to look at subsequent changes in open interest.
Comparing several indicators is more reliable than looking at just one, but even more signals can’t give you a definite answer.
Make your own decisions about entering and exiting. Don’t follow the crowd.
Let’s use this figure to break down the funding rate.
The rate mainly consists of two parts: the premium of the perpetual contract over spot, plus a base interest rate component. When the premium is small, most contracts settle at around 0.01% every 8 hours.
Funding rates typically return to normal either because prices correct or because one side of a crowded trade exits. To tell which, you need to look at subsequent changes in open interest.
Comparing several indicators is more reliable than looking at just one, but even more signals can’t give you a definite answer.
Make your own decisions about entering and exiting. Don’t follow the crowd.