Funding Rates in Crypto Perpetuals: How They Work and How to Trade Them

Perpetual futures use funding rates to stay anchored to spot prices. Understanding funding rates is essential for any derivatives trader.

Perpetual futures (perps) do not have an expiry date — unlike traditional futures that expire quarterly. To prevent them drifting away from spot price, a funding mechanism charges longs (if perps trade above spot) or shorts (if perps trade below spot) at regular intervals (every 8 hours on most exchanges, every second on Hyperliquid). Understanding funding rates turns a cost centre into a potential income source.

How Funding Rates Work

Trading Funding Rate Signals

Funding Rate Arbitrage

When BTC perpetuals have high positive funding: sell perps, buy spot (delta-neutral) → earn funding rate with no directional risk. At 0.1%/8h = 109% annualised gross yield. Practical net yield after borrow costs: 30-80% APY depending on conditions. Execute via Steyble Perps (short side) + Steyble spot (long side) — both managed in one portfolio view for the position.