Funding-Rate Arbitrage: How to Earn on Crypto Futures Without Picking a Side

Why Funding Rates Deserve Your Attention

Perpetual futures never expire, so every few hours an exchange balances their price against spot. When the perp trades above spot, longs pay shorts; when it trades below, shorts pay longs. That payment—the funding rate—is simply money moving from one crowd to the other. The exchange is just the postman.

Positive Funding: When the Herd Is Bullish

Contracts sit above spot, longs are footing the bill.

• Buy the coin on spot.
• Short the same amount in the perp.
• Price can whip anywhere-—every eight hours you collect the fee.

Negative Funding: When Bears Run the Show

Perps trade below spot, shorts now pay the tab.

• Short the coin on spot (or via margin).
• Go long the perp for the same size.
• Direction still doesn’t matter—as long as funding stays negative, the payouts keep coming.

What the Math Looks Like

Imagine funding at +0.03 % per period. On a one-BTC position worth $100 000, that’s $30 every eight hours—about $90 a day. Annualised, the yield can rival high-end DeFi farms, provided the rate and fee structure hold steady.

Caveats People Gloss Over

• Fees add up. Trading, withdrawal, margin costs—tally every cent.
• Liquidity shocks kill the gravy train. Once euphoria subsides, positive funding can evaporate overnight.
• Exchange risk is real. Spot and perp usually sit on the same platform; a withdrawal pause turns a hedged book into a hostage situation.

Four Ground Rules

1. Shop for the best rate on multiple venues. Park the perp where funding is highest.
2. Skip leverage. A liquidation wipes out the whole idea.
3. Keep margin headroom. A sudden wick shouldn’t drag your account into the danger zone.
4. Check rates daily. One lazy day can erase a month’s payouts.

Who Should Consider It

Long-term holders who’d rather milk a coin than sell it, funds hunting for steady cash flow, and traders with more discipline than FOMO.

Bottom line
Funding arbitrage looks humble—a few hundredths of a percent per cycle—but patience turns crumbs into a solid annual yield. Beat three enemies—fees, platform hiccups, and personal complacency—and you’ll be earning from patience, not price predictions.