Why perpetual futures need funding
A normal futures contract expires, and on expiry its price must meet the spot price. A perpetual never expires, so something else has to pull it towards spot. That something is funding: at fixed times, traders on one side pay traders on the other.
- If the perpetual trades above spot, funding is positive and longs pay shorts. Holding a long becomes more expensive, which pushes price back down towards spot.
- If it trades below spot, funding is negative and shorts pay longs.
The exchange does not keep this money; it passes directly between traders.
How much does funding cost?
Funding is quoted as a percentage per interval. On most Binance perpetuals the interval is 8 hours (00:00, 08:00 and 16:00 UTC), though some coins settle every 4 hours or every hour. You pay or receive:
position size × funding rate at each settlement you hold through.
Example: a $10,000 long at +0.01% pays about $1 per 8-hour interval — $3 a day. At +0.10% it pays $10 per interval, $30 a day. At −0.10% that same long receives $10 per interval.
Around +0.01% per 8 hours is the normal baseline on many perpetuals. Readings far from that are where it gets interesting.
Reading funding as crowd positioning
Traders only keep paying high funding when they are very confident — or stuck. That makes extreme funding a map of where the crowd is:
| Funding | What it says | Risk |
|---|---|---|
| Deeply negative | Shorts are crowded and paying to stay in | A short squeeze if price turns up |
| Near the baseline | Balanced positioning | Little information either way |
| Strongly positive | Longs are crowded and paying a premium | A long squeeze on a sharp dip |
During a squeeze, the crowded side’s stop-losses and liquidations become market orders in the opposite direction, which is why squeezes move so fast.
Funding works best with open interest
Funding alone is not a timing signal — a coin can stay crowded for days. Combine it with open interest and a price trigger:
- Negative funding + rising OI — shorts are still adding and still paying. The fuel is building.
- Negative funding + price breaking a key level — the trigger that can turn that fuel into a squeeze.
- Very positive funding + falling OI — longs are starting to leave a crowded trade.
Scanning funding across the market
Squeeze fuel
Crowded shorts, still adding, with price breaking yesterday’s high.
See the funding rate scanner for more.
Free live tools
- Funding rate history: every payment for any coin over 30 days, with totals and the annualised rate.
- Delta Exchange funding rate live: every Delta perpetual ranked by funding.
Frequently asked questions
Is negative funding bullish?
Negative funding means shorts are crowded and paying longs. It can precede a short squeeze, but it is not a timing signal on its own — combine it with open interest and a price trigger.
When is funding paid on Binance?
Usually every 8 hours at 00:00, 08:00 and 16:00 UTC (05:30, 13:30 and 21:30 IST). Some perpetuals settle every 4 hours or hourly.
Do I pay funding if I close before settlement?
No. Funding is only exchanged by positions that are open at the settlement time.
Crypto futures are leveraged and carry a high risk of loss. This guide is educational and is not investment advice.