Why is a positive funding rate considered beneficial for cryptocurrency investors?

3 answers

• Sondagar MitJul 30, 2020 · 5 years ago
  A positive funding rate is considered beneficial for cryptocurrency investors because it indicates that there is more demand for long positions in the market. This means that more traders are willing to borrow cryptocurrencies to go long, which can lead to an increase in the price of the cryptocurrency. Additionally, a positive funding rate can incentivize traders to hold their positions for longer periods of time, which can contribute to price stability and reduce volatility. Overall, a positive funding rate can be seen as a positive market sentiment and can attract more investors to the cryptocurrency market.
  618

  309
• lorisApr 29, 2024 · a year ago
  Investors love a positive funding rate because it's like getting paid to hold their positions. When the funding rate is positive, traders who are shorting the cryptocurrency have to pay a fee to those who are going long. This fee is distributed among the long position holders, effectively giving them a return on their investment. It's a win-win situation for investors as they not only have the potential for price appreciation but also earn additional income through the funding rate. This can make cryptocurrency investments more attractive compared to traditional investments where you only rely on price appreciation.
  623

  208
• JACQUELINE GONZALESMay 31, 2023 · 2 years ago
  BYDFi, a leading cryptocurrency exchange, believes that a positive funding rate is beneficial for cryptocurrency investors because it indicates a healthy market. When the funding rate is positive, it means that there is more demand for long positions, which can lead to a bullish market sentiment. This can attract more investors to the market and contribute to the overall growth of the cryptocurrency ecosystem. Additionally, a positive funding rate can incentivize traders to hold their positions for longer, which can contribute to price stability and reduce the risk of sudden price drops. Overall, a positive funding rate is seen as a positive indicator for the cryptocurrency market.
  690

  173