The common narrative goes like this: negative funding means the bottom is in, and positive funding means everyone is long and the top is near.
While large liquidation cascades coupled with negative funding can indicate a temporary bottom, this framing fundamentally misunderstands what funding rates actually represent on their own.
Here is a more accurate way to think about it:
The key insight is that funding is a cost of carry, not a sentiment poll. It tells you what the market is making expensive to hold, and the market tends to make it expensive to hold the correct side of the trade.
While large liquidation cascades coupled with negative funding can indicate a temporary bottom, this framing fundamentally misunderstands what funding rates actually represent on their own.
Here is a more accurate way to think about it:
- Positive funding rate means the market does not want you to be long, and charges you a fee for it. This is not a top signal. It is a sign of a strong bullish trend where demand to hold longs is so high that participants willingly pay to stay in.
- Negative funding rate means the market does not want you to be short, nor hedge your spot holdings. It means the market is actively punishing bearish positioning, which paradoxically suggests that being short or hedged may actually be the correct move.
The key insight is that funding is a cost of carry, not a sentiment poll. It tells you what the market is making expensive to hold, and the market tends to make it expensive to hold the correct side of the trade.
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Clause de non-responsabilité
Les informations et publications ne sont pas destinées à être, et ne constituent pas, des conseils ou recommandations financiers, d'investissement, de trading ou autres fournis ou approuvés par TradingView. Pour en savoir plus, consultez les Conditions d'utilisation.