Bybit has a funding rate. If you understand the funding rate, you will be able to understand how fees are generated at the same time, and your understanding of Bybit will deepen. If you use this funding rate well, you can greatly increase your assets.
- Bybit’s main functions and features
- What is a funding rate?
- Funding rate confirmation method
- Is Bybit’s funding fee cheap?
- Notes on funding rate
Bybit’s main functions and features
Many deposit and withdrawal methods
Bybit has a wide range of deposit and withdrawal methods, and in fact supports credit cards, fiat currencies, and virtual currency remittances. History can also be downloaded. There are also P2P transactions. Specifically speaking, you can also send Bitcoins. You can check it on the official website. You can also deposit and withdraw money using your smartphone. Zero cut is also adopted.
Many coins available
Bybit handles many coins. Covers major coins such as BTC, ETH, and USDT. You can also earn interest at this funding rate. When thinking about when to sell, it is a good idea to consider not only the chart but also the funding rate. Funding rates are high, with receipts occurring every 8 hours every day. The amount you can receive depends on the coins.
What is a funding rate?
Funding rate is the swap point generated when holding a position. If you hold a position at that time, you need to pay a commission, but depending on the rate, you may receive a commission as interest. This is called a funding rate. Funding rate is also called swap point, swap fee, or swap interest rate. Funding rate does not occur for spot trading, only perpetual futures trading.
when it occurs
The funding rate will occur three times at 0:00 am, 8:00 am, and 4:00 pm Japan time. If you hold a position during this time, you will be charged a fee. If the funding rate is positive, long position holders pay short position holders. If the funding rate is negative, short position holders will pay long position holders.
Why Funding Rate Occurs
The funding rate occurs because the price difference between spot and futures trading is corrected. Spot trading is done at the current rate, and futures trading is about how much you will buy and sell in the future, so there will be price differences. In virtual currency, it is a mechanism to maintain the stability and market balance of the market using the adjustment valve that fills the price difference called the funding rate.
Funding rate calculation method
The funding rate calculation is as follows. The mark price is the fair price when the loss cut (liquidation), in which the position is forcibly closed due to unrealized losses, unrealized gains, and losses, is executed.
Funding Fee = Position Value x Funding Rate (%)
Position Value = Contract Quantity ÷ Mark Price
Funding rate confirmation method
You can check how to check the funding rate by logging into your Bybit account. If you haven’t opened an account yet, please do so below.
Display Bybit’s trading screen and select the currency pair you want to check the funding rate.
After selecting, the funding rate is displayed in the red frame on the screen.
Is Bybit’s funding fee cheap?
Bybit’s funding rate is a positive or negative value depending on the movement of the market. What about other exchanges? Binance, one of the world’s leading exchanges, has a funding rate of ±0.75%, which is quite large. Bybit has a smaller fluctuation range, so it can be said that it is suitable for beginners.
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Notes on funding rate
There are some things to keep in mind regarding funding rates. Although we have only explained the advantages above, there are some disadvantages that you should be aware of.
Funding rates are not fixed. It is normal for funding rates to fluctuate. Depending on the timing, you may have to pay more funding fees than usual. In other words, it is not always profitable, so please consider whether to do it after understanding that point.
As mentioned above, the funding rate fluctuates, but the range of fluctuation varies considerably depending on the coin. If it is a stable coin, the fluctuation range will be very small, but if it is an unstable coin, it will move up and down very violently, so I think it will be quite unsettling. Be especially careful when holding minor virtual currencies for a long period of time.
Both sides possible
Funding rates also occur on both sides. Generally, it is common to hang it by either going up or down, but some people hang it on both sides. By building both, the profit and loss is fixed, and there is an advantage that the loss will not increase any more, especially when you have an unrealized loss. However, this method has the disadvantage that it is difficult to make a profit, and if the timing of loss cut is wrong, it will result in not being able to make a profit well.
Depends on leverage
By the way, funding rate is also related to leverage. Leverage is a principle of leverage, so the higher the risk, the higher the possibility of making a profit, but there is also the risk of a large loss. In other words, the profits you receive will vary depending on how much risk you are willing to take.