XRP’s funding rate on Binance fell to -0.028%, a 10-month low, signaling extreme bearish positioning among derivatives traders.
The last time funding reached these levels (April 2025), XRP rose from around $1.60 to $3.65 by July – an 82% gain as shorts were squeezed out.
Today’s setup has tailwind: XRP spot ETFs have attracted over $1 billion since their launch in November 2025, and the SEC process officially ended in August 2025.
Headwinds remain: Bitcoin hovers near $65,000, crypto ETFs have seen months of outflows, and the Fed’s dovish stance keeps pressure on risk assets.
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The XRP (CRYPTO: XRP) funding rate on Binance fell to -0.028%, a 10-month low. Such negative funding means the sell side is crowded – almost everyone is already short and there is no one left to sell.
The last time funding reached these levels was in April 2025, and the price of XRP rose from $1.60 to $3.65 in mid-July, marking an 82% gain. When almost everyone expects lower prices, any positive catalyst can cause a quick reversal.
But the broader market today is weaker than it was in April 2025, so this time could play out differently. Here’s what the funding signal means and what would have to change for history to repeat itself.
The funding ratio measures what part of the market is paying to maintain its position. When it turns deeply negative, sellers pay a premium to go short—a sign that bearishness has become extreme.
CryptoQuant’s Arab Chain analyst calls the current reading “a clear move to defensive positioning,” meaning traders are strongly bearish. CryptoQuant strategist Darkfost adds that “the market tends to move against a late consensus.” In other words, when almost everyone is positioned the same way, reversals often follow.
At -0.028%, XRP’s funding rate shows that sellers have been aggressively rallying. Funding ratios don’t predict when the reversal starts, but they do show when a part of the trade is overcrowded – and overcrowded trades tend to clear quickly. If that happens here, the price of XRP could see a sudden move higher as sellers rush to exit.
CryptoQuant data shows that this pattern has existed before. Funding was deeply negative at the end of 2024 and again in April 2025 – and both times followed a strong recovery.
In April 2025, the price of XRP fell to around $1.60, with the SEC process still pending. Funding was deeply negative, meaning sellers were crowded out. Then in May, the SEC announced a settlement agreement with Ripple. Sellers rushed to exit, and the price of XRP surged 82% to $3.65 by mid-July. The funding signal came first, but the catalyst arrived a few weeks later.
Hi, my name is Jacco / Shutterstock.com ·Hi, my name is Jacco / Shutterstock.com
The funding signal is clear, but whether the XRP price rises depends on the forces unfolding.
Today’s setup has headwinds that didn’t exist in April 2025. Spot XRP ETFs launched in mid-November 2025 and generated over $1 billion in net inflows in the first month without a single day of outflows. Bitcoin and Ethereum ETFs saw billions of redemptions during the same period, making the steady flows of XRP even more notable.
Ripple has also expanded aggressively, spending more than $2.5 billion on acquisitions in 2025, including the $1.25 billion Hidden Road deal. BlackRock’s BUIDL fund now integrates with Ripple’s RLUSD stablecoin, adding institutional credibility.
The SEC process is fully behind Ripple now, removing the regulatory uncertainty that has weighed on the token for years. If a short squeeze comes in on top of these tailwinds, analysts see XRP price returning to $2.40 in the short term, with $3.65 – the July 2025 high – as a medium-term target.
XRP price action typically follows the broader crypto market, and right now that market is struggling. Bitcoin is trading around $63,000 in early February 2026, marking the weakest level in over a year. Billions have flowed out of Bitcoin and Ethereum ETFs since October 2025, and the Fear & Greed index has hit single digits. In such a broad selloff, XRP tends to fall with everything else.
Fed policy is making matters worse. Kevin Warsh has been nominated to chair the Fed, and markets are expecting tighter conditions. Unlike April 2025, when traders were hoping for a Fed pivot, there is no increase in liquidity on the horizon.
With the broader market so weak, XRP’s extreme funding rate could remain negative longer than expected. If the selling pressure continues, the price of XRP could fall below $1.70, with some analysts warning of a drop towards $1.25.
The financing rate has done its job: it shows that sellers are stretched thin. But two things would confirm that a reversal is in fact underway.
First, the funding rate itself should start to normalize toward zero as shorts close out their positions, but that hasn’t happened yet. Second, XRP reserves on exchanges are near a two-year low, meaning holders are moving tokens into long-term storage rather than getting ready to sell. If this trend continues while funding normalizes, the setup for an XRP price reversal strengthens.
The direction of Bitcoin is also vital. A move back above $75,000 would ease the pressure on altcoins. A break below $60,000 would likely drag the XRP price lower, regardless of how crowded the short side becomes.
The funding rate issues a warning that a reversal could be near, but whether it arrives depends on catalysts and the broader market.
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