According to the definition, traders may have to pay or be paid depending on the position and the valid funding rate.

If the funding rate is positive: The future price of the asset is higher than the spot price. Traders with long positions will be the ones paying traders with short positions.

If the funding rate is negative: The future price of the asset is lower than the spot price. Traders with short positions will be the ones paying traders with long positions.

The funding rate can influence trader sentiment in particular and market sentiment in general. In this growth market phase, the funding rate is often a positive number reflecting the optimistic sentiment of traders. Conversely, during recent corrections, the funding rate is often a negative number, which can create a pessimistic sentiment among traders.