Exchanges use the funding rate mechanism to keep perpetuals prices aligned with spot prices. A positive funding rate indicates that perpetuals are trading at a premium to the spot price, indicating increased demand for bullish bets. As such, a high funding rate, as seen early this week, is said to reflect over-optimism, often observed at interim market tops.
Source: https://www.coindesk.com/markets/2024/03/06/crypto-funding-rates-reset-after-bitcoins-sharp-pullback-from-69k/?utm_medium=referral&utm_source=rss&utm_campaign=headlines