 ▲ XRP |
XRP has entered a new inflection point for a potential rebound after fully flushing out overheated market leverage, as its funding rate fell to the lowest level since last April.
According to cryptocurrency media outlet BeInCrypto on February 8 (local time), as volatility in the digital asset market has recently increased, XRP’s funding rate plunged sharply to hit a 10‑month low. The funding rate refers to the periodic payment exchanged between long and short position holders to keep perpetual futures prices aligned with spot prices. The fact that XRP’s funding rate has dropped to around -0.028 and remains subdued indicates a sharp decline in demand for long positions or dominant selling pressure from market participants expecting further downside.
Arab Chain, an analyst at on-chain analytics platform CryptoQuant, views the sharp drop in funding rates as a necessary process for a healthy market correction. He noted that the excessive leverage built up in long positions over recent months has been liquidated during the price decline, removing much of the speculative froth that had been capping upward momentum. Historically, periods when funding rates entered negative territory or fell to extremely low levels have often been followed by short squeezes—buying pressure driven by the liquidation or covering of short positions—leading to sharp price rebounds, which is seen as a positive signal for investors.
Even amid unstable market conditions as Bitcoin (BTC) attempts to establish itself above $70,000, XRP has held the $1.44 level, forming a distinct supply-and-demand structure of its own. Institutional investors are using the low funding rates to build defensive positions in the futures market or as hedging tools, in contrast to the exit of short-term speculative traders. On-chain data analysis shows that large whale investors are taking advantage of the current low funding-rate environment to accumulate, preparing for potential sharp price volatility ahead.
From a technical perspective, XRP is focusing on building a base at key supply zones on the daily chart to halt the downtrend. As the relative strength index gradually recovers from oversold territory, the completion of the funding-rate reset could serve as a starting signal for a meaningful price recovery. If XRP successfully defends its current support level, a swift recovery rally targeting the $1.50 area could follow alongside short-position liquidations, with the possibility of faster-than-expected price gains should market sentiment improve.
The cryptocurrency market is now watching closely to see who will take control in the post‑liquidation environment. XRP’s low funding rate signals that speculative excess has cooled, while also indicating that conditions are in place for a more agile upside move during a rebound. Rather than reacting emotionally to short-term price fluctuations, investors are monitoring changes in futures open interest and potential reversals in funding rates as they prepare for the next phase of market restructuring.
*Disclaimer: This article is for investment reference only, and no responsibility is assumed for any losses resulting from investment decisions based on it. The content should be interpreted solely for informational purposes.*