What Market Condition Does a High Positive Funding Rate Typically Indicate?

A high positive funding rate typically indicates that the market is predominantly bullish, meaning the majority of traders are long on the perpetual contract. This high demand for long positions drives the perpetual contract price above the spot price, resulting in a large positive premium.

The positive funding rate then forces longs to pay shorts, creating a financial incentive for traders to take short positions and thus bringing the contract price back down toward the spot price.