How Does the Funding Rate Impact the Effective Cost of Holding a Perpetual Futures Position Long-Term?

The funding rate is a critical factor in the long-term cost of holding a perpetual futures position. A consistently positive funding rate makes a long position expensive to hold and a short position profitable to hold.

Conversely, a consistently negative rate makes a short position expensive and a long position profitable. This cost/income must be factored into any long-term strategy.