Understanding Coinglass Funding Rate Colors

Just got into Coinglass, and I’m confused about these funding rate bars. I see green bars showing bullish signals and yellow for bearish. Tried trading Zcash, which shot up almost 30% on Sunday, but all afternoon those bars were mostly yellow. Feels like a mismatch... are people shorting too much and getting liquidated?

I’m pretty new to Coinglass too. It’s meant for visualizing derivatives data, but there are other tools like TradingView and Santiment. I think the color bars help you get a quick read on market sentiment. But if they’re showing extreme colors, it usually means something's off with the rates.

You can actually customize the colors based on the funding rate value. The defaults are like this: green means the rate is between 0 and 0.005, and red is from 0.01 to 0.05. Basically, if the funding rate is negative, traders are mostly shorting. If it’s positive, they’re typically long.

Funding rate mainly indicates the overall sentiment of perpetual futures, but it's not a reliable short-term price predictor. Spot prices can jump while the funding rate lags because it adjusts less frequently. Traders might short on impulse when prices spike, hence the funds get negative.

Yeah, the funding rate just keeps the perpetual prices aligned with the spot prices. If the market price is above spot, the funding rate turns positive. It doesn’t really mean much beyond that. Some traders profit off the funding rate itself.