What Is Binance Funding Rate and How to Check It?

·

Understanding the funding rate is essential for anyone trading perpetual futures contracts on major cryptocurrency exchanges like Binance. This mechanism plays a crucial role in aligning perpetual contract prices with the underlying spot market. In this guide, we’ll explain what the funding rate is, how it works, and how to check it on Binance—using clear, step-by-step instructions to help both beginners and experienced traders.

Understanding the Funding Rate in Crypto Futures

The funding rate is a periodic fee exchanged between long (buy) and short (sell) positions in perpetual futures contracts. Unlike traditional futures, perpetual contracts don’t have an expiration date, so the funding rate ensures that their price stays close to the index price of the underlying asset—such as BTC/USDT or ETH/USDT.

When trading perpetual swaps, traders pay or receive funding every 8 hours, depending on the direction of their position and the current funding rate. This mechanism prevents long-term divergence between the contract price and the spot price.

👉 Discover how real-time trading tools can help you monitor funding rates effectively.

How Does the Funding Rate Work?

The funding rate can be either positive or negative, and this determines who pays whom:

For example, if the BTC/USDT perpetual contract shows a funding rate of 0.0057%, and you hold a $10,000 short position, you would earn approximately $0.57 every 8 hours from long-position holders.

Funding is settled automatically at predefined intervals—on Binance, this happens three times per day at 00:00 UTC, 08:00 UTC, and 16:00 UTC. You don’t need to manually send or receive payments; the system handles it directly from your futures wallet.

How to Check Funding Rate on Binance

Checking the funding rate on Binance is straightforward. Follow these steps:

  1. Log in to your Binance account.
  2. Navigate to the Derivatives section and select USDⓈ-M Futures (for USDT-denominated contracts) or COIN-M Futures (for coin-denominated contracts).
  3. Choose the specific trading pair you're interested in (e.g., BTC/USDT).

  4. On the trading interface, locate the Funding Rate displayed near the price chart.

    • You’ll see two values: the next funding time (a countdown) and the current rate.
  5. Click on “More” or “Funding History” to view past rates and analyze trends.

This information helps traders make informed decisions—especially those engaged in strategies like funding rate arbitrage or carry trades, where consistent positive or negative rates are exploited for profit.

Why Does the Funding Rate Exist?

The funding rate mechanism exists primarily to anchor perpetual contract prices to the spot market. Without it, traders could endlessly go long or short without cost, leading to significant price divergence.

For instance:

Conversely, when too many traders go short, the negative funding rate rewards longs and discourages further shorting.

This self-correcting system maintains market equilibrium and supports fair pricing across spot and derivatives markets.

👉 Learn how advanced trading platforms provide real-time insights into funding trends.

Using Funding Rates for Trading Strategies

Smart traders use funding rates not just to understand market sentiment but also to build profitable strategies:

1. Sentiment Analysis

A persistently high positive funding rate may indicate excessive bullishness—a potential sign of a market top. Conversely, a deeply negative rate might signal oversold conditions.

2. Funding Rate Arbitrage (aka "Funding Carry Trade")

Some traders open positions specifically to collect funding payments:

However, this strategy carries market risk—if price moves strongly against your position, losses can outweigh funding gains.

3. Timing Entries and Exits

Traders often avoid opening large positions just before funding settlement, especially if they’d be on the paying side. Others may close positions temporarily to skip a costly funding payment.

Frequently Asked Questions (FAQ)

What time is funding paid on Binance?

Funding is settled every 8 hours—at 00:00 UTC, 08:00 UTC, and 16:00 UTC. The exact time is shown as a countdown on the trading interface.

Can I avoid paying funding fees?

Yes. You can close your position before the funding timestamp to avoid paying (or receiving) the fee. Note that you must fully close the position—partial closures still incur fees on remaining size.

Is a high funding rate good or bad?

It depends on your position. A high positive rate benefits short holders but costs long holders. It may also signal over-leveraged market conditions, increasing volatility risk.

Does funding rate affect spot prices?

Not directly. The funding rate impacts perpetual contract prices and trader behavior but doesn’t move spot prices. However, strong derivatives activity can indirectly influence spot markets through trader sentiment and liquidations.

Where can I see historical funding rates?

On Binance, go to the futures page for any pair, click on “More,” then select “Funding History.” You can view data for the past 90 days.

Can I profit just from collecting funding?

Technically yes—if you can maintain a position while consistently earning funding payments. But this requires careful risk management, as adverse price movements can quickly erase gains.

👉 Access powerful analytics tools that track historical and real-time funding data across major cryptocurrencies.

Core Keywords

By understanding how the funding rate works and how to monitor it on platforms like Binance, traders gain a strategic edge in managing risk, interpreting market sentiment, and exploring alternative income streams within the crypto derivatives space. Whether you're a casual trader or building sophisticated strategies, this knowledge is foundational to long-term success.