Here's some context to go with the cheat sheet I shared last month. A short thread, explaining what $BTC funding is and how you can use it in your analysis.

Likes and RTs appreciated as always. https://twitter.com/CryptoJelleNL/status/1307333655048654851

1 - Funding is a mechanism used to keep the price of perpetual swap/futures close to the price of the underlying spot instrument. Funding is adjusted to encourage the closing of positions in order to rebalance perp price.

2 - When perp price moves away too far from spot price, funding is used to re-balance the price.

When perp trades below spot price, funding goes negative and shorts pay funding to longs.

When perp trades above spot price, funding goes positive and longs pay funding to shorts.

This works as an incentive to close your position, creating the necessary buy/sell pressure to bring price back to spot levels.

Funding can therefore serve as a sentiment indicator. High funding shows longs are the "crowded trade", whereas low funding shows shorts are "crowded"

My cheat sheet (top of thread) visualises how funding can be used in relation to price. It's important to note that you use this to add to your regular analysis. Please don't trade off of funding alone.

Find the funding rates of different exchanges on: http://bybt.com 

Hope this explains it clearly. If you have any questions, feel free to ask.