Funding Rate Explained: How Perps Stay Tethered to Spot
Funding is a small periodic payment between long and short position holders that keeps a perpetual contract’s price anchored to the underlying spot index. Reading funding tells you who’s crowding which side of the trade — and when a squeeze might be brewing.
What funding actually is
Because a perpetual never expires, nothing naturally forces its price back to spot. Funding is that forcing function: when the perpetual trades above the index, longs pay shorts; when it trades below, shorts pay longs. The payment is sized to the gap, which makes holding the wrong side of an extreme deviation expensive — and that cost is what pulls price back.
On BULK, funding settles hourly, and the rate is set by the gap between the perpetual price and its underlying index.
Positive vs. negative funding
- Positive funding: perp trades above spot — longs pay shorts. Persistent positive funding means crowded longs are paying to stay long.
- Negative funding: perp trades below spot — shorts pay longs. Sustained negative funding signals crowded shorts.
- Extreme funding in either direction often precedes sharp reversals, because the paying side is bleeding and the setup is fragile.
Using funding as a signal, not a crystal ball
Funding is one layer of a broader read. The strongest setups combine funding extremes with open interest (how much leverage is stacked) and order flow (whether aggression supports the move). For example, rising open interest plus heavily positive funding means leveraged longs are piling in — a fade that has room to run if spot stalls.
Funding alone doesn’t tell you direction. It tells you positioning — who is paying whom to stay in the trade.
Where to watch funding live
Funding is displayed on the live BULK trading interface for every market, alongside order flow, open interest and volatility. The pair reference pages on this site link directly to each market’s live view.
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Frequently asked questions
Who pays funding on a perpetual?
The side that is net-long pays the side that is net-short when the perpetual trades above spot, and the reverse when it trades below spot. The exact direction depends on the funding rate’s sign.
How often is funding paid on BULK?
BULK settles funding hourly.
Does high funding mean price will reverse?
Not by itself. Extreme funding signals crowded positioning, which raises the odds of a sharp move when conditions shift — but timing it requires confirmation from order flow, open interest and price action.