Amazing, I really need to remember what I saw in the early morning.

Around 4 AM, lying in bed ready to sleep, as usual, I opened Binance to check the price of @Riverdotinc . At that time, I glanced at the funding rate of the contract, which reached -2%

😮

I thought to myself, when I wake up, I have to quickly open the computer to see what the long-short ratio and the charts will look like.

As a result, the current long-short ratio on OKX has reached 2, and the BN funding rate has also changed to -0.39%. But interestingly, the current spot price is $21.17, and the contract price is $20.64.

I also saw a price difference this large between $RIVER spot and contract last time, so I specifically recorded it this time.

How will the price move next? I'm quite looking forward to it 🤔😆

💡 Many people have misunderstandings about the funding rate:

In perpetual futures on cryptocurrency exchanges, the funding rate is a mechanism used to keep the contract price in line with the underlying asset's spot price, avoiding excessive divergence.

Therefore, the funding rate is not simply determined by whether there are more long positions or short positions, but is driven by the degree of divergence between the perpetual contract price and the spot price.

The funding rate is usually settled every 8 hours (depending on the exchange).

💡 Why is the funding rate negative?

When the contract price is lower than the spot price, the funding rate turns negative → shorts need to pay fees to longs.

The purpose is to incentivize more longs to enter, pulling the contract price back near the spot price, avoiding excessive divergence.

Currently, River is a typical negative rate scenario: short positions are heavy and continuously paying fees.

That’s all, stay vigilant and do not enter the market when you do not understand.

* NFA, DYOR