Funding Rates (Stellar)

Measures the aggregate funding rates for the asset across leading global exchanges.

Sentiment Amplification Feedback Loop

Crypto funding rates act as a real-time gauge of market positioning extremes. When funding rates reach elevated positive levels (longs paying shorts), this signals overcrowded bullish positioning - a classic contrarian indicator. The mechanism becomes self-reinforcing as:

• High rates increase holding costs for longs, forcing profit-taking
• Liquidations cascade through over-leveraged positions

Leverage Flush-Out Dynamics

Perpetual futures markets amplify volatility through their embedded leverage (often 10-100x). Elevated funding rates correlate with:

• Increased margin pressure on overextended positions
• Accelerated liquidations during price reversals
• Reflexive selling from forced position unwinds

Funding rate data is sourced from leading crypto derivatives exchanges (e.g., Binance, OKX) through their published perpetual futures contract metrics. Aggregation involves weighting by open interest to reflect market-wide sentiment. The normalized index compares current rates to historical averages, flagging deviations from typical market conditions.