Funding rates are a key indicator for gauging cryptocurrency market sentiment. In perpetual futures contracts, funding rates determine payments between long and short traders to balance the market. A positive funding rate, where longs pay shorts, signals bullish sentiment as demand for leveraged long positions rises, often during price uptrends. Conversely, a negative funding rate, where shorts pay longs, reflects bearish sentiment, indicating more traders are betting on price declines, typically in downtrends. High positive rates may suggest over-optimism and potential corrections, while persistent negative rates could hint at oversold conditions and a possible reversal. By monitoring funding rates alongside price action and volume, traders can assess market bias, identify extremes, and anticipate shifts—making it a powerful tool for crypto sentiment analysis.