Funding Rates Explained: What They Tell You About Leverage

5 min read · updated 14 November 2026

Funding rates show whether traders using perpetual futures are mostly long or short. Learn how funding works, how to read it and why rates are converted to 8 hours.

Most crypto trading by volume happens in perpetual futures, often called perps. They let traders bet on a price with borrowed money, and unlike normal futures they never expire. Funding is the mechanism that keeps their price close to the real market price.

How funding works

Every few hours, traders holding perpetual positions pay each other a small fee. If the perp trades above the spot price, the rate is positive and traders holding long positions pay those holding short positions. If the perp trades below spot, the rate is negative and shorts pay longs. The exchange itself does not keep this money.

Reading the numbers

• Around +0.01% per 8 hours is the usual neutral level on most exchanges.
• Clearly higher means many traders are paying to stay long. The market is leaning one way, and sudden drops can force those longs to close.
• Negative means shorts are paying. That often happens after sharp falls or when many traders are hedging.

To get a feel for size: 0.01% three times a day is roughly 11% a year. A rate of 0.05% per 8 hours is close to 55% a year, which is expensive to hold.

Why this site converts to 8 hours

Exchanges settle funding at different intervals. Hyperliquid settles every hour, while Binance, Bybit and OKX use 8 hours for most contracts and 4 hours or less for some. The derivatives page converts every rate to an 8 hour rate so the columns compare directly. Bitget is assumed to use 8 hours, because its public ticker call does not state the interval.

Open interest

Open interest is the total value of futures positions that are still open. Rising open interest together with high positive funding means more leverage is building up on the long side. Falling open interest means positions are being closed.

Funding and open interest describe how traders are positioned. They do not tell you which way the price will go.

This guide is general information, not financial advice.