Funding & open interest
Funding rate
To keep perpetual prices close to spot, longs and shorts pay each other a funding rate, usually every 8 hours. Positive funding: longs pay shorts (the crowd is long). Negative funding: shorts pay longs.
Open interest
Open interest is the total value of futures positions still open. Price rising with rising open interest means new money is joining the move. Very high funding and open interest show a crowded trade that can unwind fast.
Test yourself
Funding is strongly positive. That means…
Longs are paying shorts: the crowd is longPositive funding = longs pay.
What is open interest?
The total value of futures positions still openIt counts open contracts, not trades.
What is the funding rate for?
Keeping perpetual prices close to spotIf perps drift above spot, longs pay, which pulls the price back.
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