Kumo Research · Funding rates
Crypto funding rates 2020–2026: longs used to pay over 35% a year, now they pay almost nothing
Funding is the fee that longs and shorts pay each other every few hours on perpetual futures. It is a big hidden cost (or income) for anyone holding a perp for weeks. We downloaded every funding payment on Binance for 20 large coins from January 2020 to October 2026, about 130,000 payments in all, and asked three simple questions. How much did longs really pay? How often did shorts pay instead? And did extreme funding say anything about the price that followed?
By Alex Wu · Published · 6 min read
Key findings
- Funding has fallen year after year. The typical coin's longs paid 38% a year in 2021. In 2026 so far the typical coin is at 1.8%. For Bitcoin it went from 30.6% (2021) to 3.1% (2026).
- Longs paid 91% of the time in 2021 but only 64% in 2026. Shorts now pay in about one funding period out of three (33%).
- The "default" rate of 0.01% per 8 hours (about 11% a year) used to be the most common reading: 49% of all payments in 2020. In 2026 it is 22%. Funding now floats around zero instead of sitting at the default.
- Extreme funding was not a reliable signal. After three days of negative funding, Bitcoin rose over the next 30 days more often than usual (69% vs 56%), but Ethereum, XRP and Dogecoin did not. Very high funding (above 50% a year) was followed by gains as often as by losses.
- The longest stretches of negative funding came with big events: Bitcoin in the March 2020 crash and for 11 days in April 2026, and Ethereum for 13 days just before the Merge in September 2022, when traders shorted ETH to hedge the expected ETHPoW airdrop.
What funding is, in one paragraph
A perpetual future ("perp") never expires, so something has to keep its price close to the real price. That something is funding: every 8 hours (on some coins every 4), one side pays the other a small percentage of the position. When the perp trades above the real price, usually because more people want to be long, longs pay shorts. When it trades below, shorts pay longs. On Binance the starting point is 0.01% per 8 hours, which is about 11% a year, and the premium moves it up or down from there.
It sounds tiny, but it adds up. A $10,000 long paying 30% a year costs about $8 a day, every day, whether the price moves or not.
Six years of funding, month by month
Bitcoin and Ethereum funding on Binance, month by month
Average funding paid by longs, as % per year (negative = shorts paid)
- Bitcoin
- Ethereum
Source: Binance funding rate history (data.binance.vision) · Chart: Kumo Research, kumocast.io
The chart tells the story of the market. Funding jumped in every rally: early 2020, early 2021 and March 2024. Bitcoin's longs paid 94% a year on average in February 2021. Funding went negative in the March 2020 crash, after the May 2021 crash, around the FTX collapse in November 2022 and again in early 2026.
But the most important thing is the trend. Each big rally since early 2021 has had lower funding than the one before, and 2025–2026 have been the lowest yet.
| Year | Coins | Typical coin, % a year | Longs paid | Shorts paid | At the 0.01% default | Above 50% a year |
|---|---|---|---|---|---|---|
| 2020 | 14 | +17.1% | 81% | 9% | 49% | 14.0% |
| 2021 | 16 | +38.1% | 91% | 7% | 44% | 24.1% |
| 2022 | 16 | -0.5% | 58% | 39% | 32% | 0.0% |
| 2023 | 19 | +7.9% | 77% | 20% | 45% | 1.1% |
| 2024 | 20 | +13.4% | 84% | 14% | 43% | 6.0% |
| 2025 | 20 | +3.7% | 70% | 27% | 33% | 0.0% |
| 2026 (to Oct) | 20 | +1.8% | 64% | 33% | 22% | 0.0% |
"Typical coin" = the median of the 20 coins' yearly average funding. Rates paid every 4 hours are converted to 8-hour terms. Coins count only in years with at least 100 days of funding.
In 2021 the typical coin's longs paid 38% a year. In 2024, the year of the US Bitcoin ETFs, it was 13%. In 2025 it was 3.7%, and in 2026 so far 1.8%.
Shorts pay much more often than before
How often longs paid, by year
Share of all funding payments on 20 coins where longs paid shorts
- Longs paid
- Shorts paid
Source: Binance funding rate history, 20 coins · Chart: Kumo Research, kumocast.io
In 2021, longs paid in 91% of all funding periods. In 2026 that is down to 64%, and shorts paid in 33%. The 0.01% "default" rate that used to be the normal reading (49% of all payments in 2020) now shows up in only 22%.
Why? We can't prove it from funding data alone, but three changes fit the timing:
- More people run "cash-and-carry" trades. They buy the coin and short the perp to collect funding. That extra short demand pushes funding down. Bitcoin ETFs and funds like Ethena made the trade bigger from 2024 on.
- More venues. Traders now spread over many exchanges and on-chain venues, so one crowded side has less effect on Binance alone.
- Calmer markets. Bitcoin's daily swings have shrunk (see our Bitcoin volatility study), so fewer traders pile into leveraged longs at once.
The longest stretches of negative funding
For Bitcoin, the longest run of days with negative funding was 11 days in April 2026 (11–21 April). Next were 9 days in September 2024 and 9 days during the March 2020 COVID crash, when funding hit −139% a year on 13 March.
For Ethereum the record is 13 days in September 2022, ending on the day of the Merge (15 September). Many traders shorted ETH perps so that they could hold ETH for the expected ETHPoW airdrop without price risk. Funding fell to −193% a year on Merge day. It was a clear case of funding showing hedging, not a bet on the price.
Is funding a buy or sell signal?
You often read that negative funding is bullish ("shorts are crowded, a squeeze is coming") and very high funding is bearish ("longs are crowded"). We tested both on five coins.
| Coin | Any day | After 3 days of negative funding | After funding above 50% a year |
|---|---|---|---|
| Bitcoin | +1.9% (56% up) | +5.8% (69% up) | +3.1% (55% up) |
| Ethereum | +2.0% (55% up) | -1.4% (47% up) | +13.1% (64% up) |
| Solana | +0.6% (51% up) | +0.6% (51% up) | +61.9% (80% up) |
| XRP | -1.6% (47% up) | -0.7% (48% up) | -5.1% (45% up) |
| Dogecoin | -2.8% (46% up) | -2.7% (41% up) | +7.0% (56% up) |
Daily closes on Binance, 2020–2026. Windows overlap, so these are not independent bets; treat the differences as weak.
The results do not support a simple rule. After three days of negative funding, Bitcoin did better than usual over the next 30 days: a median +5.8%, up 69% of the time, against +1.9% and 56% on any day. But Ethereum did worse after negative funding, and XRP and Dogecoin were about the same. Very high funding was followed by a fall for XRP but by gains for Ethereum, Solana and Dogecoin.
Funding describes how traders are positioned now. It is useful context, but on its own it did not tell you what came next.
What this means for traders
- Holding a long perp is much cheaper than it was. At 2026 rates, a $10,000 Bitcoin long pays roughly $1 a day in funding, against about $8 a day in 2021. That can change fast in a bull run, so check the live rate.
- Shorts can earn funding but can also pay it. Shorts paid one period in three in 2026. A long-term short is no longer a steady earner.
- Do not treat extreme funding as a signal by itself. Use it as one input among many.
Compare today's funding across 12 exchanges on the funding rates page, or ask the Kumo Engine "how much funding will I pay on a $5,000 BTC long for a week".
Method, data and limits
Data: every funding payment for 20 USDT perpetual contracts on Binance (BTC, ETH, SOL, XRP, DOGE, BNB, ADA, TRX, LINK, AVAX, LTC, BCH, DOT, SUI, NEAR, UNI, AAVE, ARB, WIF and 1000PEPE), January 2020 – October 2026, from Binance's public data archive. About 130,000 payments. Coins listed later (SUI, ARB, WIF, PEPE) start when their perp started.
Units: funding is shown in % per year (rate per 8 hours × 3 × 365) so it can be compared with interest rates. Payments every 4 hours are scaled to 8-hour terms. Positive = longs pay shorts.
Signal test: for Bitcoin, Ethereum, Solana, XRP and Dogecoin, we took the average funding over the last three days and the price change over the next 7 and 30 days, using Binance daily closes.
Limits: this is Binance only. Other exchanges, and especially on-chain venues, can be quite different (see our Hyperliquid vs Binance study). Funding is only one cost of holding a perp; trading fees and spreads are not included.
Download the data (CSV, CC BY 4.0)
How to cite
Kumo Research (2026). "Crypto funding rates 2020–2026: longs used to pay over 35% a year, now they pay almost nothing". Kumocast. https://www.kumocast.io/research/crypto-funding-rates-history-2020-2026
This study describes past market data. It is not investment advice and past behaviour does not guarantee future results.
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About the researcher
Alex Wu
Crypto, DeFi, perps and FX · driven by data
Alex designed the Kumocast model behind these signals, sets its rules, reviews its accuracy record and updates the methodology whenever the model changes. Signals are refreshed every 30 minutes with live market data.