Funding Rate

What it measures

The periodic payment between long and short perpetual-futures positions on Kraken's BTC/USD contract - positive means longs pay shorts (a crowded-long signal), negative means the reverse.

Formula

Read directly from Kraken's historicalfundingrates endpoint's relativeFundingRate field - not derived by this project.

Normal range

Small positive readings are typical in a mild uptrend; sustained large positive readings suggest crowded leveraged longs; negative readings suggest crowded leveraged shorts.

How it fails

A single reading is one contract on one exchange, not the whole market's positioning - and this project explicitly does NOT annualize it (Kraken's funding interval for this contract isn't fixed/documented the way a traditional 8-hour perp is), so it should be read as a per-interval rate, not a yield.

Related metrics

DVOL

Bull read

Negative funding (shorts paying longs) alongside a stable or rising price can indicate short-covering pressure still ahead.

Bear read

Persistently high positive funding suggests crowded leveraged longs - a condition that has preceded sharp long-liquidation cascades, though the timing is never signaled by the rate itself.