The periodic payment between long and short holders of crypto perpetual futures that keeps their price near the spot price. High positive funding means traders are crowded on the long side.
Perpetual futures never expire. Instead, every few hours one side pays the other: when the futures price is above spot, longs pay shorts, and vice versa. The rate is usually quoted per eight hours.
Why it matters
Persistently high funding signals leverage and optimism building up, which has often come before sharp falls as leveraged longs are forced out. Deeply negative funding can mark capitulation.
