XRP's derivatives markets are currently signaling intense bearish pressure, with funding rates plunging into significantly negative territory across major exchanges. This environment, however, raises a critical question for investors: could this extreme sentiment precede a market reversal, or does it hint at further declines for the digital asset?
Deep Dive into Negative Funding Rates
Real-time funding metrics from Coinglass reveal that XRP's average funding rates have consistently remained below zero in recent trading sessions, with the lowest recorded at a stark -0.0748%. This sustained negative rate indicates a strong dominance of short positions in perpetual futures markets, where short sellers are actively paying long holders. While this clearly reflects prevailing bearish sentiment and potentially overcrowded short exposure, historical data offers a glimmer of hope: such deeply negative funding conditions have sometimes preceded sharp price rebounds, particularly if price action begins to stabilize and forces short sellers to cover their positions. Further technical analysis highlights that XRP's aggregated funding rate, weighted by open interest, is currently at its lowest weekly level since late 2022—a period that notably marked a market bottom following the FTX crash.
Open Interest Echoes Historic Accumulation Levels
Mirroring the drop in funding rates, XRP's open interest has also experienced a significant decline, returning to levels historically associated with multi-year accumulation bases. This "base level" for open interest has proven resilient since October 2022, repeatedly preceding rebounds to higher price points each time it was revisited. In terms of price action, XRP has been struggling to establish a sustainable bottom, influenced by a broader crypto market that has yet to turn decisively bullish. The article identifies crucial intermediate support around $1.45, a level marked by recent daily candle wicks, with a more substantial demand zone roughly spanning $1.15 to $1.30 underneath. Although XRP was trading around $1.49 at the time of writing, having recently touched above $1.60 during the weekly open, a decisive weekly close above $1.50 is presented as the first critical step towards confirming a return to bullish momentum.
