As interest in cryptocurrencies grows, more and more people are beginning to invest.
Especially after being re-elected, the previously quiet President Trump has started talking about Bitcoin and cryptocurrencies again.
The joke that cryptocurrencies would only be used for election campaigns and then discarded has faded, and now investors' attention is focused on what strategies will unfold in 2025.
However, it is not possible to view the current market sentiment positively like the end of last year or the beginning of this year. Due to high volatility, each investor needs to have their own strategy.
This has led to increased investment through global exchanges. Therefore, today I would like to introduce Binance, the world's number one exchange, and explain a crucial concept that you must know, the Funding Fee.
Binance is widely recognized for having leading trading volumes and the most users in both spot and futures trading.
The funding fee is a term used in futures trading.
Futures trading allows for trading in two directions: long positions betting on price increases and short positions betting on price decreases.
If the market is perceived to be trending downward, investors take shorts, whereas if they believe prices will rise, they take longs. This creates an imbalance between longs and shorts.
If the sentiment is positive, the number of long positions will increase. Conversely, when the market declines, short positions will increase.
To address this imbalance, the Funding Fee mechanism was created.
According to the official explanation, Binance's Funding Fee is a payment made between long and short traders based on the difference between the perpetual contract price and the spot price at regular intervals.
For example, if the funding fee is positive (+), it means that longs are prevailing. In this case, long traders will pay short traders.
If the funding fee is negative (-), it means that shorts are prevailing, and in this case, short traders will pay long traders.
Binance's funding fee is calculated three times a day at 08:00, 16:00, and 00:00 Ulaanbaatar time (ULAT).
During these times, depending on your position (long or short), you may either receive or pay the funding fee. Of course, leverage also applies, so the outcome may be larger depending on market conditions.
For example, using 48,000,000 MNT with 30x leverage will amount to 1,440,000,000 MNT. If the funding fee is set at 0.01%, you will pay approximately 144,000 MNT.
Therefore, when it is time to make the payment for the funding fee, market volatility sharply increases.
This means that the funding fee and its rate are directly related to the market supply and demand balance. Understanding this will help you better read market trends and sentiments.
Of course, this concept is more beneficial for experienced investors. However, being knowledgeable about the funding fee is also very important for novice investors and can be combined with other strategies.
By registering through the link below, you can receive a 20% discount on fees.
📍 Get a 20% discount on Binance fees
Registered users can receive a 20% discount on fees if they meet the following 5 conditions.
The invited person must already be registered on Binance.
The invited person must not have previously accepted the invitation.
The invited person's account must not have traded or used products on Binance in the last 180 days.
The person who receives the invitation will see a confirmation window as soon as they open the link and log in.
The inviter's connection will become valid by clicking [Bind Now].
Caution: If you enter or miss the referral code incorrectly, it cannot be corrected. Therefore, please register through the link below and do not forget to benefit.
Binance's funding fee is a crucial concept that can be particularly utilized in today's highly volatile market.
I hope this explanation has been helpful to you. I wish you success in your trading, and let's meet again in the next article. Thank you.
