XRP funding conditions have been mirroring the behavior seen ahead of sharp price rebounds since 2024, with negative funding rates leading to short squeezes. The bearish consensus among derivatives traders formed after a roughly 50% decline in XRP spot prices from its multiyear high of $3.66, established in July 2025. However, according to on-chain analyst Darkfrost, this could hurt the bears in the coming weeks.

Negative Funding Rates and Short Squeezes

Binance funding rates stayed mostly negative in the past two months, meaning more leveraged traders bet on XRP price falling, and that they had to pay to keep their short positions open. XRP Ledger funding rates on Binance. Source: CryptoQuant/Darkfrost

The analyst cited the period of persistent funding rates since 2024, each resulting in sharp price rebounds. That includes BTC’s 50% rise in August-September 2025 and over 100% gains in April-July 2025, as illustrated below. XRP Ledger funding rates vs. price. Source: CryptoQuant

Accumulation of Shorts and Latent Buying Pressure

“The accumulation of shorts does create short-term selling pressure, but it also builds latent buying pressure,” Darkfrost wrote, adding: “If the price starts to rise, these positions could be liquidated, fueling the upward move.” As of January, XRP had rebounded modestly after testing the lower trendline of its year-long sideways channel trend, aligning with the $1.80-2.00 support area. XRP/USD three-day chart. Source: TradingView

Meanwhile, the $2 level remains a key psychological line for XRP in the short to medium term. In an earlier analysis, Glassnode found that each retest of the $2 area since early 2025 coincided with roughly $500 million to $1.2 billion in weekly realized losses, suggesting many holders used those moves to exit and cut their losses rather than add exposure. XRP realized loss vs. price. Source: Glassnode

Technical Analysis and Price Projections

From a technical standpoint, XRP bears are looking to pull the price toward its 200-week exponential moving average (200-week EMA blue wave) at around $1.40 if it fails to reclaim its 50-week EMA (red wave) at $2.22 as support. XRP/USD weekly chart. Source: TradingView

The “latent-buying-pressure” thesis by Darkfrost will weaken materially if XRP price decisively loses the $1.80–$2.00 support zone. For more information, you can read the full article Here

Smart Tip for Readers

To stay informed about XRP price movements and market analysis, consider following reputable sources and on-chain analysts, and always prioritize verifying information through multiple sources before making any investment decisions. By doing so, you can make more informed choices and stay up-to-date on the latest developments in the cryptocurrency market.