Bitcoin Funding Rate Volatility Signals Caution

Understanding Bitcoin Funding Rates

To comprehend the Bitcoin funding rate volatility, it's essential first to understand what funding rates are. Funding rates are periodic payments made between traders who are long (buying) or short (selling) on futures contracts. These rates help ensure that the price of futures contracts remains close to the spot price. Essentially, if the funding rate is positive, traders who are long pay those who are short, and vice versa.