Glossary term
Funding Rate (Crypto)
The periodic payment mechanism on crypto perpetual futures that keeps them tethered to spot; a real-time sentiment gauge.
The Funding Rate is the periodic payment exchanged between long and short holders of crypto perpetual futures to keep the contract price tethered to spot. A high positive funding rate means longs are paying shorts, signaling crowded bullish positioning and leverage. It functions as a real-time sentiment and leverage gauge, with extreme readings often preceding violent unwinds. See Money Temperature 101.