XRP’s (CRYPTO: XRP) funding rate on Binance dropped to -0.028%, a 10-month low. A funding this negative means the selling side is crowded—almost everyone is already short, and there’s no one left to sell.
The last time funding hit these levels was April 2025, and the XRP price rallied from $1.60 to $3.65 by mid-July, marking an 82% gain. When nearly everyone is expecting lower prices, any positive catalyst can spark a rapid 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 need to change for history to repeat.
What the Funding Rate Signals for XRP Price
Funding rate measures which side of the market is paying to hold their position. When it goes deeply negative, sellers are paying a premium to stay short—a sign that bearish positioning has become extreme.
On-chain analyst Arab Chain at CryptoQuant calls the current reading “a clear move toward defensive positioning,” meaning traders are leaning heavily bearish. CryptoQuant strategist Darkfost adds that “the market tends to move against a late consensus.” In other words, when nearly everyone is positioned the same way, reversals often follow.
At -0.028%, XRP’s funding rate shows sellers have piled in aggressively. Funding rates don’t predict when the reversal starts, but they do show when one side of the trade is overcrowded—and overcrowded trades tend to unwind fast. If that happens here, the XRP price could see a sharp move higher as sellers rush to exit.
CryptoQuant data shows this pattern has played out before. Funding flipped deeply negative in late 2024 and again in April 2025—and both times, a strong rebound followed.
In April 2025, the XRP price had fallen to around $1.60 with the SEC lawsuit still unresolved. Funding was deeply negative, meaning sellers were crowded. Then in May, the SEC announced a settlement agreement with Ripple. Sellers rushed to exit, and the XRP price rallied 82% to $3.65 by mid-July. The funding signal came first but the catalyst arrived a few weeks later.
Why This XRP Funding Signal Could Play Out Differently
The funding signal is clear, but whether the XRP price rallies depends on which forces play out.
Bullish Case
Today’s setup has tailwinds that didn’t exist in April 2025. Spot XRP ETFs launched in mid-November 2025 and pulled in over $1 billion in net inflows within their first month, with no single day of outflows. Bitcoin and Ethereum ETFs saw billions in redemptions over the same period, making XRP’s steady inflows even more notable.
Ripple has also been expanding aggressively, spending over $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 lawsuit is fully behind Ripple now, removing the regulatory uncertainty that weighed on the token for years. If a short squeeze kicks in on top of these tailwinds, analysts see the XRP price recovering toward $2.40 in the near term, with $3.65—the July 2025 high—as a medium-term target.
Bearish Case
XRP’s price action usually follows the broader crypto market, and right now, that market is struggling. Bitcoin is trading around $63,000 in early February 2026, marking its weakest level in over a year. Billions have flowed out of Bitcoin and Ethereum ETFs since October 2025, and the Fear & Greed Index hit single digits. In a selloff this broad, XRP tends to fall with everything else.
Fed policy makes things worse. Kevin Warsh has been nominated as Fed Chair, and markets expect tighter conditions ahead. Unlike April 2025, when traders hoped for a Fed pivot, there’s no liquidity boost on the horizon.
With the broader market this weak, XRP’s extreme funding rate could stay negative longer than expected. If selling pressure continues, the XRP price could slide below $1.70, and some analysts warn of a drop toward $1.25.
What This Means for XRP Price
The funding rate has done its job: it shows that sellers are stretched thin. But two things would confirm that a reversal is actually underway.
First, the funding rate itself should start normalizing toward zero as shorts close 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 preparing to sell. If that trend continues while funding normalizes, the setup for an XRP price reversal strengthens.
Bitcoin’s direction is also vital. A move back above $75,000 would ease pressure across altcoins. A breakdown below $60,000 would likely drag the XRP price lower regardless of how crowded the short side gets.
The funding rate is flashing a warning that a reversal could be close, but whether it arrives depends on the catalysts and the broader market.
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