Detect crowded long/short positioning across major perp exchanges
Answers which side of the perpetual futures market is paying funding for each tracked coin, and whether it is paying at a crowded rate. For each coin it reads the funding rate for one eight-hour period, usually the plain average of the readings taken over the eight hours to the latest one, each weighted by open interest across every perpetual market the data feed reports, and states how many readings and which hours stand behind it, with its annualized equivalent. Who pays is read from the sign of the rate. Each coin is placed in one of five published bands (crowded long, mild long, flat, mild short and crowded short) with its distance to the nearest cut-offs, and the coins together take the band of the plain average of their rates. A 0-100 score rates how extreme the funding is. Funding is the cost of holding a perpetual, not a count of positions, so a crowded band describes an expensive side rather than a forecast, and it can persist through a trend.
Perpetual funding - a mechanism most prominent in crypto, precisely defined, and routinely misread as a positioning measure.
WHAT A PERPETUAL IS. A futures contract with no expiry date. Ordinary futures converge to spot because they settle; a perpetual never settles, so something else must tether it. That mechanism is FUNDING: at fixed intervals, commonly every eight hours, one side pays the other according to the SIGN of a calculated funding rate. A sustained premium of the perpetual over the index normally produces a positive rate, under which longs pay shorts - penalising length and pulling the price back down - while a negative rate makes shorts pay longs. The exact rate is venue-specific: formulas use an averaged premium index plus an interest component, with clamps and caps, so an instantaneous price comparison does not determine the next payment. WHO PAYS IS READ FROM THE SIGN OF THE RATE, never from whether the perpetual sits above or below its index at one moment. Binance, for example, adds an interest component of 0.01% per eight hours and holds the rate at exactly that while the averaged premium stays between -0.04% and 0.06%, so a perpetual trading slightly below its index still carries positive funding and longs still pay. It is a periodic, market-set carrying cost standing in for the convergence a settlement date would provide.
THE ARITHMETIC. An 8-hour rate is paid three times a day, so annualising means multiplying by roughly 1,095. A rate of 0.01% per interval - which sounds negligible - is about 11% a year. Small numbers here are not small.
WHAT IT ACTUALLY MEASURES, and this is the correction that matters. Funding is a PRICE: the cost of holding the perpetual relative to spot. It is not a count of positions and not a direct measure of crowding. The two are related, because persistent demand for leveraged length pushes the perpetual above the index, but they are not the same thing.
THREE CONSEQUENCES OF THAT DISTINCTION.
HOW IT CONNECTS TO EVERYTHING ELSE HERE. Funding is the crypto analogue of the cost of carry, and the same relationship links spot and dated futures in the basis analysis - the two are two views of one thing.
WHAT THIS ANALYSIS PUBLISHES. Each figure is usually an average of readings across the perpetual markets reported for the coin, and the published statement beside it gives the number of readings and the hours, or says when it is a single reading or the hours cannot be stated - few readings make a noisy rate. A single venue's current rate covers a different window and fewer markets, so a cross-venue average need not sit between venue rates. The band names and cut-offs, the one rule that sets the band for the coins together, and each figure's distance to the next cut-off are published with each run's findings; they are the only bands. The bands and the extremity score are our own convention.
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