A negative funding rate means perpetual futures are trading below spot, and shorts must pay longs every funding window.
Why Funding Goes Negative
- Heavy short interest pushes the perp below spot.
- Premium index turns negative.
- Common after bad news or liquidations.
Strategy
If negative funding persists, a long position earns payments from shorts and can profit from a squeeze. Scan for the most negative rates on the funding rate screener and model the carry with the funding rate calculator. Directional — use stops.
For education only. Not financial advice.