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, the funding rate for Bitcoin tends to be positive as traders believe prices will continue to rise, but when the market becomes overheated, it often loses momentum and prices begin 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 overly confident, the risk of liquidation for shorts increases accordingly.