The funding rate of perpetual contracts is one of the most useful indicators for measuring the sentiment of the crypto market.
In the first half of 2025, the funding rates remained generally positive but moderate, reflecting a bullish market but less euphoric compared to previous cycles. According to the CoinGlass 2025 semi-annual report, the brief bear reversals coincided with episodes of panic, offering valuable short-term reversal signals.
Funding rate: what does it indicate in the crypto market?
The funding rate is the periodic cost paid between long and short traders in perpetual contracts:
- positive → prevalence of long positions, bull sentiment.
- negative → prevalence of short positions, bear sentiment.
An excessively high or low funding rate can signal extreme market conditions and risk of reversal.
2025: funding rate crypto moderately positive
CoinGlass highlights that in the first half of 2025 the funding rates:
- they remained mostly above 0.01%, indicating an overall bullish sentiment.
- have rarely exceeded excessive thresholds, demonstrating a more prudent leverage.
This balance reflects the growing maturity of the market and the increased caution of institutional operators (source: CoinGlass).
Temporary inversions
During three key episodes, the funding rates briefly went into negative territory:
1️⃣ February: announcement of US tariffs → negative funding and long liquidations.
2️⃣ April: collapse of BTC below $90,000 → new bear peak.
3️⃣ June: geopolitical shock → temporary bear sentiment.
In all three cases, the negative funding rate coincided with local lows and preceded a price rebound.
Why haven’t the funding rates exploded?
Unlike past cycles, where funding rates soared to extreme levels during prolonged rallies, in 2025 the market has remained more balanced thanks to:
- liquidations that have cleaned up the excess leverage.
- better margin management on the exchanges.
- greater institutional participation.
This has reduced the probability of a self-reinforcing leverage spiral.
What to expect in the second half
CoinGlass predicts that the funding rates will remain close to zero or slightly positive, consistent with a cautiously bull sentiment. Any sustained rallies or sudden shocks could push the funding rate to extreme levels only temporarily.
In the first half of 2025, the funding rate proved to be an effective sentiment indicator and helped keep the market in balance.
Investors should continue to monitor it, especially in combination with data on leverage and liquidations, to identify opportunities and manage risks.