Negative funding rate: what it means and who pays whom

A negative funding rate means that short positions pay long positions. It happens when a perpetual contract trades below the index — the asset’s spot price: the exchange makes shorting more expensive and holding a long more attractive, to bring the contract price back to spot.

Who pays whom

The payment goes between traders, not to the exchange, and is calculated on the position’s notional value, not on the margin: leverage does not change the amount, only its share of your capital.

How to calculate the payment

Example: a 10,000 USDT position, a rate of −0.05% per period.

In each case the short pays the same amount. That is why a rate is always read together with its interval — which exchanges use which intervals is shown in the table of funding intervals by exchange.

Why the rate goes negative

• A sell-off. In a sharp drop sellers open shorts on perps faster than spot falls, and the contract slips to a discount to the index.
• Crowded shorts. When most traders open short positions — on a forecast, on news, as a hedge — the contract price sags relative to spot.
• Hedging. Coin holders (funds, stakers and airdrop participants, recipients of unlocked tokens) sell the perp to lock in the price without selling the coins themselves. This flow of shorts pushes the rate down.
• No easy short on spot. If the coin is hard to borrow for a spot short, everyone who wants to profit from a decline goes to perps — and pays for it through funding.
• New listings. On newly launched contracts the rate often swings both ways until an equilibrium forms.

Most of the time the rate is not negative: in a calm market most exchanges return it to the base 0.01% per 8 hours. In the scanner snapshot of 2026-10-22, 2,740 of 15,230 contracts had a negative rate — about 18%.

Is negative funding a bearish signal?

Not necessarily. A negative rate shows that shorts are currently willing to pay to hold their positions, that is, the market is skewed to selling. It describes current positioning, not a price forecast:

• a deeply negative rate together with rising open interest means many shorts are paying — if the price turns up, their forced closing can accelerate the move (a short squeeze);
• a negative rate in a falling market without rising open interest more often reflects longs closing than new shorts.

How to earn on a negative rate

Simply opening a long to collect payments is risky: a day of funding is easily outweighed by a price move. So negative-rate payments are collected in a price-neutral pair:

• a long perp with a negative rate + a short perp of the same coin on another exchange where the rate is higher (around zero or positive). The coin’s price barely affects the result, and the income is the difference between the two rates. This is funding arbitrage;
• a long perp + selling the coin on spot (via a margin loan) — reverse cash-and-carry; it only works if the coin can be borrowed and the borrowing rate is below funding (see basis and cash-and-carry).

Things to keep in mind:

• the rate changes and can flip within one or two payments — look at the history, not only the current value;
• the contract’s discount is already in the price: a perp with a negative rate is usually cheaper, and as the discount narrows the pair’s price spread changes too;
• when the rate hits its lower cap the exchange may shorten the interval (for example from 8 to 1 hour) — payments become more frequent and a reversal hits faster;
• fees and slippage on entry and exit eat part of the income, and leverage brings liquidation closer — see arbitrage risks.

How SpreadScope shows it

The scanner collects funding rates from 37 exchanges, brings them to the pair’s period and shows the funding spread between the two legs — including pairs where one leg has a negative rate and the other a positive one. Accumulated funding over a day, a week and a month is calculated from actual payments, so you can see whether the negative rate held or was a one-off spike. Current rates by coin are on the funding rates page.

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