BullWhat Are Funding Rates and Why Do They Change?
BullCalc Team · · 2 min read
Perpetual futures are the most traded product in crypto, and they come with a cost many new traders only notice after holding a position for a few days: funding.
Why perpetuals need funding
Normal futures contracts expire on a set date, and their price is pulled toward the spot price as that date gets close. Perpetual futures never expire, so they need another way to stay close to the spot price. That mechanism is the funding rate.
At fixed times, often every 8 hours, traders on one side of the market pay traders on the other side. The exchange calculates the rate from the gap between the perpetual price and the spot (index) price.
Who pays whom
- Positive funding: the perpetual trades above spot, usually because more traders want to be long. Longs pay shorts.
- Negative funding: the perpetual trades below spot, usually because shorts dominate. Shorts pay longs.
This payment makes the crowded side more expensive to hold, which pushes the price back toward spot.
How much it costs
Funding is a percentage of your full position size. A common baseline rate is 0.01% per 8 hours. On a 10,000 USDT position that is 1 USDT per payment, or about 3 USDT per day. In strong trends rates can rise to 0.05% or 0.1% per period, which is 15 to 30 USDT per day on the same position.
Use the funding fee calculator to see what a position will cost over your planned holding time.
Funding as a market signal
Because funding shows which side is crowded, many traders watch it:
- Very high positive funding means many leveraged longs. If price drops, they may be forced to sell, which can speed up the drop.
- Deep negative funding means many shorts. A sudden rise can trigger a short squeeze.
Extreme funding is not a timing signal on its own, but it is useful context.
Practical tips
- You only pay or receive funding if your position is open at the exact funding time.
- For trades held for minutes or hours, funding rarely matters. For trades held for days or weeks, it can be a real cost.
- Check the current rate and the countdown to the next payment on your exchange before opening a large position.
Funding Fee Calculator
Perpetual futures charge or pay funding every few hours. See what it costs to hold your position.
Open the calculatorThis article is for education only and is not financial advice.