Positive and Negative Funding
Positive funding generally means longs pay shorts. It can signal that futures trade above spot or that long demand is strong.
Negative funding means shorts pay longs. It can indicate that the market is leaning bearish or that short demand is strong.
Overheated Conditions
If funding stays highly positive, holding long positions becomes expensive and long liquidation pressure can grow during a pullback.
If funding stays deeply negative, shorts may be crowded. A rebound can then trigger fast short covering.
Read with Other Indicators
Funding alone is risky for direction. Check whether OI is increasing and whether CVD confirms actual trade pressure.
After news events or abrupt market moves, funding can lag or become temporarily distorted.