Perpetual futures have no expiry date, so exchanges use a funding rate to keep the contract price close to the underlying spot price. At fixed intervals, traders on one side of the market pay traders on the other side a small fee based on the gap between the perpetual price and spot.
When the funding rate is positive, longs pay shorts, which typically signals that demand to be long is dominant. When it is negative, shorts pay longs. The mechanism creates an economic incentive that nudges the perpetual price back toward spot.
Funding rates are widely used as a sentiment gauge. Persistently high positive funding indicates crowded long positioning and a rising cost to hold those longs, while negative funding indicates the reverse. The rate describes positioning and cost, not a forecast of future price.