Bitcoin and Funding: 1 in 4 Payments Cost Money Instead of Earning It

Two identical positions, opened on the same day on the same perpetual contract, for the same amount. The first is closed at 7:59 UTC, the second at 8:01. Two minutes apart, and only the second one receives the payment for the period. The first exited before the settlement. This is the normal operation of funding, and it is often the first thing one discovers when one stops looking at it as an indicator to try to collect it.

The trading minute defined it this summer and made it a sentiment signal for directional traders. Our first article derived the principle of a neutral position and a theoretical order of magnitude, close to 11% per year. This third part goes in the opposite direction, based on actual settlements. Over the last twelve months, the BTCUSDT contract on Binance has made 1,095 payments, and their total is far from what the calculation promised. Here’s what remains when counted payment by payment, with fees and settlement currency.

This article is brought to you by DCY. To discover their approach, visit dcy.fund.

Key Points

• The funding does not run like interest: it is settled at fixed times, three times a day on major platforms, and only the position present at the moment of the settlement is paid.
• From October 2025 to September 2026, Binance's BTCUSDT funding yielded 3.37% of the notional, not 10.95%. The reference rate of 0.01% was never exceeded, and one in four payments was negative.
• With 0.10% fees for entering and exiting, it took an average of eleven days of payments just to cover the execution.
• The same flow collected in bitcoins yielded 4.17% in BTC, but with bitcoin having dropped by 26% over the period, the position was worth 22% less in dollars.

A Fixed-Time Income

On Binance as on Bybit, bitcoin funding is settled at 0:00, 8:00, and 16:00 UTC, which is 2:00, 10:00, and 18:00 in Paris during summer. The amount depends on the position held at that precise moment and the notional observed at the same time. Between two settlements, nothing accumulates.

This changes the way to manage the position. A bond coupon is calculated pro-rata based on days held, whereas the funding is a series of punctual events that one must be present for. A precautionary size reduction, a collateral transfer from one platform to another, or a poorly timed rebalancing during the day can result in losing an entire payment. In a strategy where the annual yield is measured in a few points, each missed period shows up in the results.

Twelve Months of Settlements

The calculation presented in our first article was based on the default rate displayed, 0.01% every eight hours, or 10.95% per year. It remained to confront it with the history, which Binance and Bybit publish for free and which anyone can download.

From October 1, 2025, to September 30, 2026, the sum of the 1,095 payments from Binance's BTCUSDT contract reaches 3.37% of the notional. The rate did not exceed 0.01% even once during the entire period. What is usually presented as a reference value served as a ceiling. Below that, 258 payments, nearly one in four, were negative, and for three consecutive months, from February to April 2026, the monthly balance was unfavorable to those holding the short leg. The best months, July and August, yielded around 0.6% each.

When reported to the actual capital immobilized, with the same assumption as in our first article (a margin equal to a quarter of the position), the yield drops to 2.7% over the year, before any fees. The periods where the funding significantly exceeds its default value, like in spring 2024, are when the buyer's leverage gets out of hand. The past year has been much calmer in this regard.

One Platform Is Not Worth Another

During the same period and for the same contract, Bybit paid 2.77%, which is 0.6 points less than Binance. The difference arises from the demand for leverage, which is never exactly the same across platforms. For a flow that weighs 3% per year, choosing where to open the position matters almost as much as the decision to open it.

The Fee Counter

A neutral position incurs costs twice, as it has two legs, each of which opens and closes. Let's take 0.10% of the notional for a complete round trip, a common level for an account that pays standard fees. At a reference rate of 0.03% per day, it takes 3.3 days of payments to cover this expense. At the actual observed rate over twelve months, approximately 0.009% per day on average, it takes eleven.

This strategy therefore struggles with movement. Each rebalancing restarts the counter, and a position that is closed and then reopened too often can spend the year paying back its own fees. Managers holding this type of position primarily seek to touch it as little as possible.

Paid in Dollars or Bitcoins?

We rarely wonder in which currency the payment falls. Margin contracts in stablecoin, such as BTCUSDT, pay the funding in digital dollars. So-called inverse contracts, margin in the asset itself, pay it in bitcoins.

Over the twelve months studied, Binance's inverse contract yielded 4.17% in bitcoins, more than its dollar equivalent. However, bitcoin, at $114,000 on October 1, 2025, was worth only $84,900 on September 30, 2026. Those counting in bitcoins gained 4.17%. Those counting in dollars saw the value of their position decline by about 22%, despite positive funding.

The first contract serves to grow a stock of bitcoins, while the second produces income in dollars that does not depend on the price. Some managers, including DCY, actually place them in distinct strategies. We will revisit this in a future article.

What the Manager Does

The manager's work begins here, and it is not limited to opening a position and then waiting. First, one must choose the location, as the gap between two platforms can reach several tenths of a point per year, accepting to move collateral there and bear counterparty risk.

The position must also be sized to withstand a quarter like that from February to April 2026 without being forced to exit. A position closed at the bottom never touches the following months of July and August.

And sometimes, it is better not to be there. When the expected rate no longer covers the fees and the cost of tied-up capital, holding the position amounts to bearing a risk that yields nothing. Doing nothing is then the right decision, even if it does not appear in any statement.

What the Funding Pays For

Common vocabulary refers to funding as a yield. The word is misleading. No one has committed to paying it. There is neither issuer nor loan contract, only more leveraged buyers than sellers, who pay as long as this imbalance lasts. The one who collects is somewhat renting their balance sheet to those who want to expose themselves more.

This rent has its good and bad seasons, and the last year has been rather lean. This does not prevent collection, but an annualized yield does not mean much unless one specifies the period, the platform, and the currency on which it was measured.

This article was brought to you by DCY. Discover their market neutral approach and funds at dcy.fund.