Perpetual Premium Index
Track the premium between perpetual futures mark price and spot index price. Spot contango, backwardation, and overleveraged markets.
Understanding the Perpetual Premium
The Perpetual Premium measures the difference between a perpetual futures contract’s mark price and the underlying spot (index) price. A positive premium means perps trade above spot (contango), signaling bullish leverage demand. A negative premium means perps trade below spot (backwardation), often seen during sell-offs.
The premium and funding rate are closely linked but measure different things. Premium reflects the current price gap between perps and spot, while funding is the periodic payment designed to close that gap. When premiums persist, funding rates adjust upward to incentivize arbitrageurs to bring prices back in line — creating basis trade opportunities where traders simultaneously buy spot and short the perpetual to capture the premium as yield.
Extreme premiums tend to be mean-reverting. A premium above +0.5% often signals overcrowded long positioning and heightened liquidation risk, while premiums below -0.5% can indicate panic selling and potential reversal zones. Tracking premium alongside open interest and funding rates gives a more complete picture of market leverage and positioning than any single metric alone.
This tool tracks premiums across all Binance Futures pairs with meaningful volume, updating every minute. Use the sortable table to quickly identify the most extreme premiums and filter by symbol to track specific assets.
What the premium/discount index tells you
The premium index measures the gap between a perpetual futures price and the underlying spot price. When perps trade at a premium (positive basis), it means buyers are willing to pay more for leveraged long exposure -- a sign of bullish demand. A 0.05% premium on BTC translates to roughly $50 per BTC above spot, which gets arbitraged through the funding rate mechanism every 8 hours.
Sustained premiums above 0.1% signal overheated long positioning. During the 2024 rally, BTC premium on Binance hit 0.3% before multiple corrections. On the flip side, deep discounts (negative basis) during selloffs mean shorts are paying to stay positioned -- capitulation territory. The most reliable reversal signal is when premium flips from deep negative back to neutral while liquidations are declining.
Basis traders exploit these premiums directly: go long spot, short perps when premium is elevated, and collect funding. This delta-neutral strategy generates 15-40% APR during trending markets. Check cross-exchange premiums on the exchange rankings to find the widest basis spreads and optimal arb opportunities.