XRP's Funding Rate Has Dropped to Negative 0.012%, a Level Last Seen When the Asset Traded Near $0.33

Popular crypto analyst CryptoinsightUK pointed out this similarity in a tweet, noting that traders appear hesitant, with open interest remaining low.

XRP’s funding rate has dropped to negative 0.012%, a level last seen when the asset traded near $0.33.

Despite this indicator, often associated with bearish pressure, XRP currently holds above the key $2.10 support level. Moreover, traders appear hesitant, with open interest (OI) remaining low and volume low.

If bullish momentum builds, it could short squeeze and drive the next price surge.

Popular crypto analyst CryptoinsightUK pointed out this similarity in a tweet, highlighting that traders appear hesitant, with OI remaining low. If bullish momentum builds, it could short squeeze and drive the next price surge.

What Do Funding Rates, OI, and Volume Indicate?

CryptoinsightUK shared a chart showcasing that XRP’s funding rate is at historic lows. Funding rates indicate the cost required to hold leveraged positions in perpetual futures contracts. Negative rates suggest that short positions (bets on price decline) prevail, as shorts pay a fee to longs.

From the chart, XRP OI stands near 591 million coins (worth approximately $1.18 billion), a relatively low figure compared to past peaks during strong trends. This low OI signals that many traders await a clearer market direction before committing substantial capital.

Spot market volume remains low, recorded at around 107 million coins daily, indicating caution among participants. XRP’s price has dropped 14.5% over the past week, reflecting this broader pressure.

Derivatives Data Shows Mixed Signals: Futures Cool, Options Heat Up?

The latest data from Coinglass shows that XRP’s derivatives market has seen its volume decline by 17.62% to $7.12 billion and open interest dropping by 3.67% to $3.56 billion.

However, options volume has surged by 120.23%, reaching $7,500, and options open interest has increased by 146.96%, hitting $983,490.

These figures highlight a mix of declining activity in perpetual futures but growing interest in options, suggesting that traders are positioning for potential volatility.

Could Negative Funding Rates Fuel an XRP Short Squeeze?

A potential short squeeze remains a key scenario. If XRP experiences upward momentum, traders with short positions may be forced to buy back at higher prices, accelerating a breakout. This pattern has historically led to sharp price increases in the crypto market.

Broader market sentiment remains a critical factor for XRP. Its price movement will likely depend significantly on overall crypto market direction and particularly Bitcoin’s performance.

Bitcoin had earlier dipped to $81,000 that triggered related drops in many altcoins, including XRP. This move pushed XRP dangerously close to losing the key $2 psychological support level.