What is the funding rate on Bybit?

On Bybit, the funding rate ensures perpetual contract prices align with spot prices—longs pay shorts if positive, and vice versa. Check it in real time on the contract page. (154 characters)

Jul 26, 2025 at 08:43 am

Understanding the Funding Rate Mechanism

The funding rate on Bybit is a periodic payment exchanged between long and short traders in perpetual contracts. This mechanism ensures the contract price stays close to the underlying spot market price. When the funding rate is positive, long positions pay short positions. Conversely, when it's negative, short positions pay long positions. This system discourages large imbalances in open interest between longs and shorts, promoting market equilibrium.

How Bybit Calculates the Funding Rate

Bybit computes the funding rate using two components: the interest rate and the premium index. The formula is:
Funding Rate = Interest Rate + Premium Index
The interest rate component is usually fixed at 0.01% per 8-hour period. The premium index adjusts based on how much the perpetual contract price deviates from the spot price. If the perpetual price is higher than the spot, the premium index becomes positive, increasing the funding rate. If lower, it becomes negative.

• Check the funding rate in real time by navigating to the contract details page on Bybit’s trading interface.
• Observe the hourly funding rate estimate shown under the "Funding" tab to anticipate upcoming payments.
• Note that funding occurs every 8 hours at 00:00 UTC, 08:00 UTC, and 16:00 UTC — missing this schedule may cause unexpected balance changes.
  

  Why the Funding Rate Matters to Traders

  
  Holding a position during funding time directly impacts your wallet balance. If you’re long and the rate is positive, you’ll lose a small percentage of your position value. If you’re short under the same conditions, you’ll earn it. Traders who ignore funding rates may see unexpected losses or gains, especially in high-leverage scenarios.
• High positive funding rates often signal strong bullish sentiment but can also indicate over-leveraged long positions.
• Negative funding rates suggest bearish dominance or a potential short squeeze if the rate becomes too negative.
  Monitoring this rate helps traders avoid being on the paying side during extended trends or volatile market conditions.
  

  How to Avoid Paying Funding Fees

  
  If you wish to avoid funding payments, close your position before the next funding timestamp. Bybit does not charge funding fees for positions held less than 8 hours.
• Set a reminder for 7 hours and 55 minutes after opening a position to close it manually.
• Use conditional orders like take-profit or stop-loss that trigger just before funding time.
• Check the countdown timer displayed next to the funding rate — it shows exactly when the next payment will occur.
  Failing to act before the 8-hour mark means accepting the fee, whether positive or negative.
  

  Where to Find Funding Rate Data on Bybit

  
  Bybit makes funding rate data easily accessible across multiple platforms:
• On the web platform, hover over the contract name (e.g., BTCUSD) to see the current and next estimated rate.
• In the mobile app, tap the contract info icon (i) to view the same details.
• On third-party tools like Coinglass or Hyblock, you can compare Bybit’s funding rate with other exchanges for arbitrage opportunities.
  This transparency allows traders to make informed decisions without needing complex calculations.
  

  Common Misconceptions About Funding Rates

  
  Many traders assume funding rates are fees charged by Bybit. In reality, Bybit does not collect any portion of the funding payment — it’s a peer-to-peer transfer between users. Another myth is that high funding rates always predict reversals. While extreme rates can signal overextension, they don’t guarantee a price move. Some traders even use high funding environments to scalp the rate itself by flipping positions just before funding time.
  

  Frequently Asked Questions

  Does Bybit charge a fee for funding payments?
  
  No, Bybit does not take any cut. The entire amount is transferred directly between long and short traders.

  Can I receive funding payments without holding a position?
  
  No. Only traders with open positions at the exact funding timestamp receive or pay the rate. Idle accounts are unaffected.

  What happens if I open and close a position within 1 hour?
  
  You will not be charged or credited any funding fee since the position was not open during the funding interval.

  Is the funding rate the same for all cryptocurrencies on Bybit?
  
  No. Each perpetual contract (e.g., BTCUSD, ETHUSD) has its own independent funding rate based on its specific market dynamics.