Average funding rate (in %):

When the rate is positive, long positions regularly pay short positions. Conversely, when the rate is negative, short positions regularly pay long positions.

During bull markets, Bitcoin's funding rate tends to be positive because traders believe that prices will continue to rise, but when the market gets overheated, it tends to lose momentum and prices start to fall, leading to a chain reaction of liquidations.

As of yesterday, the funding rate briefly dropped to negative -0.001%, the first time this year and only a few times since November, when the funding rate is negative and shorts become overconfident, the risk of shorts encountering liquidation increases.