The Bright Side: Perp Funding Remains ReasonableOct 18, 2021
Perpetuals offer another litmus test on the market. Normally, a tell-tale sign of an overheated market would be ‘perp’ funding rates surging erratically.
However, current funding rates still look compressed when compared to early 2021. While funding is not exactly cheap–at 0.05% per day, it costs 18.3% to be long for a whole year at that rate–when the benefit from being long exceeds the cost, the choice is obvious.
We should expect funding to rise as the market continues to trend. But we haven’t reached the threshold where it costs an arm and a leg per day to be long BTC. This suggests worries about excessive leverage may be premature.