How Does a Positive Funding Rate Indicate a 'Long' Bias in the Perpetual Swap Market? ▴ Learn

How Does a Positive Funding Rate Indicate a ‘Long’ Bias in the Perpetual Swap Market?

A positive funding rate means that the price of the perpetual swap is trading at a premium to the spot price (contango). To correct this premium, the mechanism requires the long position holders to pay the short position holders.

Since longs are willing to pay a premium to maintain their position, it indicates a stronger buying pressure and a general bullish or 'long' bias in the market.

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