# The basis trade is back, and it is why your funding rate looks wrong

URL: https://www.caijing188.com/basis-trade-funding-rates/
Published: 2026-10-20T16:09:39+08:00 | Updated: 2026-10-27T22:09:59+08:00
Verified: 2026-10-27

## Quick answer
A negative funding print is not automatically bearish. When the cash-and-carry trade is crowded, perpetual funding compresses toward zero or below even while spot demand is healthy, because the arbitrage sells the perp to hedge a spot long.

## Summary
Funding is a positioning signal, not a yield promise. The cash-and-carry trade is what compresses it.

## Key takeaways
- Read funding against the cash rate.
- Check open interest before drawing a conclusion.
- A sustained negative print is a positioning fact, not a forecast.

## FAQ
Q: Does negative funding mean the market is bearish?
A: Not necessarily. It means shorts are paying longs, which happens when hedged spot longs dominate the perp. Direction has to be read from spot and open interest.
Q: Why compare with the cash rate?
A: Because a carry trade only works if the funding plus basis beats what the same capital earns in T-bills. With tokenised T-bills near 3.6%, the bar is not zero.