Exchanges use the funding rate mechanism to keep perpetuals prices aligned with spot prices. A positive funding rate indicates that perpetuals are tra
Exchanges use the funding rate mechanism to keep perpetuals prices aligned with spot prices. A positive funding rate indicates that perpetuals are trading at a premium to the spot price, indicating increased demand for bullish bets. As such, a high funding rate, as seen early this week, is said to reflect over-optimism, often observed at interim market tops.
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