What is the meaning of the BitMEX funding rate and how does it affect cryptocurrency trading?

3 answers

• John RicksMar 01, 2022 · 3 years ago
  The BitMEX funding rate is a mechanism used by the BitMEX exchange to ensure that the price of perpetual contracts closely tracks the underlying spot market. It is calculated every eight hours based on the difference between the contract price and the spot price. If the funding rate is positive, long positions pay funding to short positions, and if it is negative, short positions pay funding to long positions. This rate helps to prevent large divergences between the contract price and the spot price, ensuring fair and efficient trading on the platform.
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• Student WangNov 05, 2022 · 3 years ago
  The BitMEX funding rate is an essential aspect of trading on the BitMEX exchange. It acts as an incentive for traders to keep the contract price in line with the spot price. When the funding rate is high, it indicates that there is a significant demand for long positions, and traders holding short positions will need to pay funding to those holding long positions. Conversely, when the funding rate is negative, it suggests a higher demand for short positions, and traders holding long positions will pay funding to those holding short positions. This mechanism helps to maintain balance in the market and prevents excessive price discrepancies between the contract and spot markets.
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• John BuncherJun 26, 2025 · a month ago
  The BitMEX funding rate is an interesting concept that affects cryptocurrency trading on the BitMEX exchange. It is designed to incentivize traders to keep the contract price in line with the spot price, ensuring fair trading conditions. When the funding rate is positive, it means that long positions are paying funding to short positions, which can be seen as a cost for holding long positions. On the other hand, when the funding rate is negative, short positions are paying funding to long positions, which can be seen as a cost for holding short positions. This mechanism helps to align the contract price with the spot price, reducing the potential for arbitrage opportunities and promoting market efficiency.
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