A funding rate is a mechanism used in perpetual futures contracts to ensure that the contract's price stays close to the underlying asset's spot price. It consists of regular payments exchanged between traders holding long (buy) and short (sell) positions. If the rate is positive, traders with long positions pay those with short positions. If it's negative, shorts pay longs.

A funding rate is a strong indicator of market sentiment:

• Positive Funding Rate: Indicates that the majority of traders are bullish (long) and expect the price to rise. Long position holders pay short position holders to hold their positions.
• Negative Funding Rate: Indicates that the majority of traders are bearish (short) and expect the price to fall. Short position holders pay long position holders.

Extremely high or low rates can signal market tops or bottoms, respectively.

Funding rate arbitrage involves exploiting the difference in funding rates for the same asset across different exchanges and markets (trading pairs). Our tool helps you spot these opportunities instantly.

Example Strategy:

If Bitcoin (BTC) has a high positive funding rate on Exchange A (+0.05%) and a near-zero or negative rate on Exchange B (-0.01%), you could:

1. Open a short position on Exchange A to receive the high funding payment.
2. Simultaneously open a long position of the same size on Exchange B to pay a very small or receive a funding payment.

This delta-neutral strategy allows you to profit from the rate difference, regardless of the price movement of BTC. Remember to account for trading fees and potential slippage.

Each crypto exchange is a separate market with its own pool of traders and liquidity. Differences in funding rates arise from varying levels of bullish or bearish sentiment among traders on each specific platform. Factors include market maker activity, available leverage, the overall volume of long vs. short positions on that particular exchange, and the speed of cryptocurrency withdrawals.

Exchanges pay out funding at different intervals (e.g., every 1, 4, or 8 hours). This makes direct comparison difficult. Our normalization feature recalculates all rates to a standard 8-hour equivalent, allowing for a fair, apples-to-apples comparison of funding costs and opportunities across all listed exchanges.

The data on our page is updated in real-time. We connect directly to the APIs of the exchanges (like Binance, Bybit, OKX, MEXC, BingX etc.) and display the latest funding rate as soon as it's available, ensuring you have the most current information for your trading and arbitrage strategies.