What is the funding rate in crypto?
In one line: The funding rate is a small, regular payment between buyers and sellers of perpetual futures that keeps the contract's price close to the real market price.
Why it exists
Perpetual futures never expire. Without an end date, nothing forces their price back to the real (spot) price. The funding rate does that job.
- Positive rate: the contract trades above spot. Longs pay shorts. That nudges people to sell the contract.
- Negative rate: the contract trades below spot. Shorts pay longs. That nudges people to buy.
The exchange doesn't keep the money. Traders pay each other.
A simple example with numbers
You hold a $10,000 long position in a bitcoin perpetual. The funding rate is +0.01%, paid every 8 hours (a common schedule; some exchanges pay hourly).
- Each payment: $10,000 × 0.0001 = $1, paid by you.
- Per day (3 payments): $3.
- Over 30 days at the same rate: about $90.
If the rate were −0.01%, you'd receive those amounts instead.
Notice the payment is on the full position size, not on the cash you put up. With Leverage, a $1,000 deposit can carry that $10,000 position, so $90 a month is 9% of your deposit.
Why it matters
- A hidden cost. Hold a position for weeks and funding can add up to more than your trading fees.
- A mood gauge. A high positive rate means many traders are leaning long. Very lopsided funding can come before sharp moves when crowded traders get pushed out. It's context, not a signal.
- It changes. The rate is reset each period, often within limits set by the exchange.
A common mistake
Ignoring funding on a trade you plan to hold. Check the current rate and the time of the next payment before you enter. And with leverage, check how far price can move before your position is closed, using the crypto liquidation calculator. See our bitcoin market page for how the coin trades.
Questions
Do I pay funding if I close before the funding time?
Usually not. On most exchanges you only pay or receive it if you hold a position at the exact funding time.
Does spot crypto have a funding rate?
No. Buying coins outright has no funding. It only applies to perpetual futures contracts.
Want the next step? We'll walk you through it.
Four free lessons by email, one every few days — each with a 10-minute exercise on a real chart.
Send Me the Free Lessons 4 short emails · No spam · Unsubscribe anytimeOr see the whole method, step by step:
See What’s Inside the Course Try everything free first. Decide when you're ready. · Open the free chart tool (works in the TradingView phone app)One chart idea a day, in plain English. Follow along: