funding rate
Fee crypto traders pay each other to keep leveraged bets open.
A funding rate is a periodic payment between traders in cryptocurrency futures markets. When traders use leverage (borrowed money) to bet on price movements, exchanges charge fees to keep those positions open. These fees are paid directly between traders rather than to the exchange: those betting the price will rise pay those betting it will fall, or vice versa.
Funding rates exist to keep futures prices aligned with actual market prices. When the funding rate is high and positive, it signals excessive bullish sentiment, encouraging leveraged buyers to close positions and sellers to open them. A reader seeing “funding rates hit record highs” in a headline should understand it as a sign that traders are heavily overleveraged in one direction—a potential warning that a sharp price move could trigger forced liquidations.
Written once as a plain-English reference, not as advice. Nothing here is a recommendation to buy or sell anything.