Collated Funding Rates

Collated Funding Rates is a Crypto Specific Indicator that pulls Exchange Funding Rate Data from several exchanges for both Bitcoin and Ethereum. By combining both the Funding Data for Bitcoin and Ethereum across several exchanges, a Trader can see the Collated Funding Rates for the Majority of the Crypto market.

Funding rates are periodic payments either to traders that are long or short based on the difference between perpetual contract markets and spot prices. Therefore, depending on open positions, traders will either pay or receive funding. Crypto funding rates prevent lasting divergence in the price of both markets

These Funding Rates also incentivize Liquidity Providers to take certain positions whether Long or Short based on the Funding Rate.

A Liquidity Provider, also known as a Market Maker, is someone who provides their crypto assets to a platform to help with the decentralization of trading. In return, they are rewarded with fees generated by trades on that platform, which can be thought of as a form of passive income.

When the Funding Rate is positive, the price of the perpetual contract is usually higher than the market price. Thus, traders who are long pay for short positions. Conversely, a negative Funding Rate means that short positions pay for longs.

As the funding rate increases from negative to positive Traders and Liquidity Providers are incentivized to take short positions. This can be seen on the indicator as it changes from red to green.

As the funding rate decreases from positive to negative Traders and Liquidity Providers are incentivized to take long positions. This can be seen on the indicator as it changes from green to red.

Funding Rates are used by Exchanges to manipulate the price. Because of this fact, Collated Funding Rates can be a Leading Edge Indicator as the Funding Rates tend to change when a specific up or down move in Price is coming to an end.

subcollation_weighting

Collation Weighting and Other Settings

Collation Weighting offers options for filtering different funding rates from various exchanges as either Volume Weighted or Equally Weighted. Other settings include Smoothing for viewing pivot points in the funding rates, an Extreme Conditions Heatmap for identifying market sentiments, Reversal Line for spotting potential reversals, and settings for viewing individual funding rates and changing visual aspects like colors.

  • Name
    Collation Weighting Modes
    Type
    mode
    Description

    Collation Weighting is the option to filter out the different funding rates from different exchanges as Volume Weighted or Equally Weighted.

    • Volume Weighted: This is the default setting that automatically calculates the Collated Funding Rate of each exchange by giving more weight to higher trade volume platforms. This means that the exchange with the more volume will more heavily influence the Collated Funding Rate than an exchange that has less volume
    • Equal Weighted: This setting takes all of the exchanges in the indicator and weighs them equally when calculating the Collated Funding Rate Collated Funding Rate is most effective when used on Volume Weighted mode which is the default position. This will give the user the most information regarding the true Funding Rates as higher trade volume is an important factor. Equal Weighted funding rates are better for specifically looking at individual exchanges and should not be used when factoring in multiple exchanges.
  • Name
    Smoothing
    Type
    range
    Description
    • Smoothing is an adjustable filter that smooths out the Collated Funding Rate to see pivot points where funding reverses to more positive or more negative.
    • The scale has a default setting of 5 and can be adjusted between 1 and 10 at increments of .5.
    • Increasing the Smoothing will show a general high timeframe trend in the funding rates by creating a more smooth and flowing Collated Funding Rate.
    • Decreasing the Smoothing will show more accurate and abrupt changes in Funding Rate at the Lower timeframes and result in a more choppy and erratic Collated Funding Rate.
    • Increased Smoothing is better for higher timeframes as it shows the gradual shift whereas lowered Smoothing is better for finding abrupt changes in the funding at lower timeframes signifying a potential upcoming reversal.
  • Name
    Extreme Conditions Heatmap
    Type
    bool
    Description
    • Extreme Conditions Heatmap is a tickable Function that defaults on and shows if the market conditions are extremely Bullish or Bearish.
    • If the Collated Funding Rate decreases below negative .01 it means that conditions are now highly favorable for Longs and the Green background color will continue to increase in intensity as the Collated Funding Rate decreases. The further it decreases means the incentive of taking Long positions increases.
    • If the Collated Funding Rate increases above .01 it means that conditions are now highly favorable for Shorts and the Red background color will continue to increase in intensity as the Collated Funding Rate increases. The further it increases means the incentive of taking Short positions increases.
  • Name
    Reversal Line
    Type
    bool
    Description
    • The Reversal Line is an aggregate line that shows the possibility of a reversal in the Collated Funding Rate. As the Reversal Line changes from moving in one direction to moving in the opposite direction it means that the Funding Rate is beginning to change and that the current Price Action move may be losing momentum. The Yellow Dots signify a Reversal Cross and will activate as signals of potential reversal when the Reversal Line coincides with a change in the Funding Rate from decreasing if it is Positive or increasing if it is Negative.
    • These Reversal Crosses are Leading indicators that show a high probability of current Price Action Reversal
  • Name
    Individual Funding Rates
    Type
    bool
    Description
    • This tickable function allows users to see Bitcoin and Ethereum Collated Funding Rates separately. This can be highly effective depending on the trading pair the user is viewing.
    • The funding rate for Bitcoin is shown as an orange line and often flows with the Collated Funding Rate.
    • The funding rate for Ethereum is shown as a blue line and often deviates from the Collated Funding Rate.
    • This can show significant differences between Bitcoin and Ethereum as certain Cryptocurrencies may trade more similarly to Ethereum than to Bitcoin and vice versa.
  • Name
    Exchanges in Collated Funding Rates
    Type
    list
    Description

    The Collated Funding Rates indicator currently pulls data for Bitcoin and Ethereum from 6 separate exchanges. These can be changed to only calculate certain data for either Bitcoin, Ethereum, Both Bitcoin, and Ethereum, or no data from that exchange.

    • Both: This is the default position. Data for both Bitcoin and Ethereum are collated from the exchanges.
    • BTC: Only collates data for Bitcoin from that specific exchange.
    • ETH: Only collates data for Ethereum from that specific exchange.
    • OFF: Turns off that exchange and no information will be collated. This setting allows the user to choose if they want specific exchanges and specific asset funding rates to be used in the calculation. It is often more relevant to simply change all exchange settings to BTC (Bitcoin) or ETH (Ethereum) to view only that asset in the Collated Funding Rates Indicator.
  • Name
    Color Settings
    Type
    color
    Description
    • Bull Color: Default is green.
    • Bear Color: Default is red.
    • Reversal Color: Default is purple.
    • Reversal Cross Color: Default is yellow.
  • Name
    Bull Color
    Type
    color
    Description

    Default is green and allows the user to change the color to any other color

  • Name
    Bear Color
    Type
    color
    Description

    Default is Red and allows the user to change the color to any other color

  • Name
    Reversal Color
    Type
    color
    Description

    The default is Purple and allows the user to change the color to any other color

  • Name
    Reversal Cross
    Type
    color
    Description

    Default is Yellow and allows the user to change the color to any other color

Collation Weighting and Other Settings
Collation Weighting Modes
:
[Volume Weighted, Equal Weighted]
Smoothing
:
5
Extreme Conditions Heatmap
:
true
Reversal Line
:
true
Individual Funding Rates
:
true
Exchanges in Collated Funding Rates
:
[Binance, Bitmex, Bybit, FTX, OKX, Phemex]
Color Settings
:
{Bull: 'Green', Bear: 'Red', Reversal: 'Purple', Reversal Cross: 'Yellow'}
Bull Color
:
{[#ffffff]}
Bear Color
:
{[#ffffff]}
Reversal Color
:
{[#ffffff]}
Reversal Cross Color
:
{[#ffffff]}
examplecollated_funding

Example of Collated Funding Rates Use

The simplest way to use the Collate Funding Rates Indicator is as an early alert system to show shifting Price movements that meet Bearish or Bullish Conditions.

By identifying the change in funding rate as it relates to the change in price a user can quickly identify potential bottoms and tops.

Bearish Conditions

  • Bearish Conditions based on funding occur when:
    • Funding is Positive and the Price is Increasing it is Slightly bearish
    • Funding is Positive and the Price is Neutral then it is Moderately Bearish
    • Funding is Positive and if the Price is Decreasing then it is Extremely Bearish

Bullish Conditions

  • Bullish Conditions based on funding occur when:
    • Funding is Negative and the price is Decreasing it is Slightly Bullish
    • Funding is Negative and the Price is Neutral it is Moderately Bullish
    • Funding is Negative and the Price is Increasing it is Extremely Bullish