Indicator Explanation Tutorial

Funding Rate is the fee set by crypto exchanges to maintain a balance between underlying asset perpetual futures prices and spot prices. It can generally be used to observe the balance of long and short positions in perpetual futures market, and is also a open interest analysis indicator.

When the funding rate is positive, it indicates that more traders are holding long positions, and the long side pays funding fees to the short side. Conversely, when the funding rate is negative, the short side pays fees to the long side.

Traders can use funding rates to conduct arbitrage trading or capture trading opportunities with abnormal rates.