How does the funding rate calculation work on BitMEX?

3 answers

• Silvio FerreiraMay 13, 2024 · a year ago
  Sure! The funding rate calculation on BitMEX is based on the interest rate differential between long and short positions. It is designed to incentivize traders to keep the perpetual contracts' price in line with the underlying asset's price. The funding rate is calculated every 8 hours and is applied to all open positions. If the funding rate is positive, longs pay shorts. If it's negative, shorts pay longs. The funding rate is determined by the premium or discount of the perpetual contract's price compared to the underlying index price. This mechanism helps prevent large deviations between the contract and the spot price, promoting market stability.
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• Edoardo ColomboFeb 18, 2021 · 4 years ago
  The funding rate calculation on BitMEX is a crucial aspect of the platform's operation. It ensures that the perpetual contracts closely track the underlying asset's price. By incentivizing traders to align the contract's price with the spot price, BitMEX maintains a fair and efficient trading environment. The funding rate is determined by the interest rate differential and is calculated every 8 hours. It is important to note that the funding rate can vary depending on market conditions and the demand for long or short positions. Traders should closely monitor the funding rate to make informed trading decisions.
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• Leonel TerolliAug 03, 2020 · 5 years ago
  When it comes to the funding rate calculation on BitMEX, it's important to understand that it is a mechanism to maintain the price equilibrium between the perpetual contracts and the underlying asset. The funding rate is calculated based on the interest rate differential and is applied to all open positions. This ensures that traders are incentivized to keep the contract's price in line with the spot price. By doing so, BitMEX promotes market stability and prevents significant deviations between the contract and the underlying asset. It's worth noting that the funding rate can be positive or negative, depending on the premium or discount of the contract's price compared to the underlying index price. Traders should pay attention to the funding rate to assess the market sentiment and make informed trading decisions.
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