#FundingRates

Accurate understanding Bullish & bearish.

Binance futures, funding rates reflect market sentiment. A positive rate (longs pay shorts) signals bullish sentiment, as more traders expect prices to rise. However, very high positive rates can indicate an overheated market, potentially leading to a price correction.

Conversely, a negative rate (shorts pay longs) points to bearish sentiment, with more traders expecting prices to fall. Extremely negative rates, though, might signal a crowded short market, which can cause a bullish reversal if shorts are forced to cover. Traders use these rates to gauge trends: high positive rates warn of potential pullbacks, while high negative rates suggest the possibility of a short squeeze.