XRP appears to be on the cusp of regaining bullish momentum. The digital asset’s funding rate on exchanges has turned negative, showing a short bias towards it, which could lay the foundation for a short squeeze.
XRP funding rate turns negative
Ripple’s native coin, XRP, recently saw its funding rates turn negative, confirming that the market is betting on further decline in its price. However, the negative sentiment towards the digital asset could potentially serve as the catalyst for its recovery.
XRP is trading close to 47% below its all-time high (ATH) of $3.65, a price level that was established in July 2025 following the cryptocurrency’s extraordinary 600% price rally that began in November 2024.
Following the latest ATH in July 2025, the XRP market has been in a phase of distribution and correction. This is not surprising, as consolidation after such a strong rally is considered healthy for the underlying asset’s long-term price action.
However, what is surprising is the timing of the bearish consensus on XRP. The digital asset turned bearish not at its top, but after it had already corrected more than 50% from its ATH.
Currently, XRP is experiencing a predominantly short bias, confirmed by negative funding rates on the Binance exchange since December 2025. That said, historical data shows that the market tends to move against a late consensus.
In other words, markets usually punish the traders who are late at identifying the trend or sentiment toward an asset. In XRP’s case, traders who recently took a short position are likely to be in for a rude awakening.
XRP to see a bullish rebound?
Although the accumulation of short positions tends to create short-term selling pressure, it also brews latent buying pressure in the background. If XRP sees a slight rise in price, it could lead to liquidation of short positions, further exacerbating the rise in price.
In fact, this pattern has played out twice since 2024. The first instance occurred between August and September 2024, and the second occurred during the correction in April 2025.
Both times, XRP’s funding rates turned negative before a bullish rebound that eventually changed investor sentiment and pushed funding rates back into positive territory. If history repeats, then XRP could once again see a bullish reversal, as whale deposits to exchanges continue to plummet.
