XRP is trading at $1.42, up 1.21% in the last 24 hours, but the more significant move may be happening in the derivatives market.
Darkfost, a CryptoQuant author and analyst, flagged a signal on X that the derivatives market may be setting up a trap for short sellers.
XRP’s funding rates on Binance have entered what Darkfost calls “a phase of extreme negativity,” while the price ranged between $1.35 and $1.50. Despite a roughly 60% correction, the majority of traders in the derivatives market have been positioning short.
In plain terms: the bearish trade is now crowded.
Darkfost’s view is: “When market consensus becomes excessively aligned in one direction, history shows that markets tend to surprise the majority.”
In April 2025, XRP’s funding rate on Binance hit the same extreme negative zone. The asset was sitting around $1.60 with sentiment in the gutter. What followed was a move to $3.65 by mid-July as crowded shorts were squeezed out.
Darkfost notes that CryptoQuant’s historical data shows periods of extreme negative funding rates have “often been followed by short-term rebounds or corrective rallies in XRP.”
Darkfost is careful here, and so should readers be. He adds that this setup “does not guarantee a lasting trend reversal”. It is a signal worth watching, but not a complete green light.
The broader market is still fragile. Escalating tensions between the US, Israel, and Iran – including reports of coordinated strikes and drone activity – have pushed investors toward safer assets, dragging risk markets including crypto and silver lower.
While altcoins ex-Ethereum (Total 3) have added roughly $75 billion in market cap since the start of February, the environment remains uncertain.
The CLARITY Act, which has been rising sharply in search interest this week, remains the most significant near-term catalyst. If passed, it would remove the last major regulatory barrier for institutional funds to hold XRP directly.
Also Read: Is 2026 the Year Banks Finally Adopt XRP? Clarity Act and Ripple’s Next Move
A regulatory catalyst landing on top of an oversold derivatives setup is exactly how the April 2025 rally ignited, with the SEC settling with Ripple in May 2025. The CLARITY Act could play that role this time.
Whether a catalyst arrives to trigger that setup remains the key question for XRP in March 2026.
Extremely negative funding rates show most traders are shorting XRP. When shorts become crowded, markets often move the opposite way, creating a short squeeze.
Yes. In April 2025, XRP funding rates turned highly negative near $1.60. A short squeeze followed, helping the price surge to about $3.65 by July.
No. Negative funding rates only show trader sentiment. A real rally usually needs catalysts like strong demand, positive news, or improving market conditions.
Traders are watching funding rates, market sentiment, and regulatory developments like the CLARITY Act for signs that could trigger the next price move.
CoinPedia has been delivering accurate and timely cryptocurrency and blockchain updates since 2017. All content is created by our expert panel of analysts and journalists, following strict Editorial Guidelines based on E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness). Every article is fact-checked against reputable sources to ensure accuracy, transparency, and reliability. Our review policy guarantees unbiased evaluations when recommending exchanges, platforms, or tools. We strive to provide timely updates about everything crypto & blockchain, right from startups to industry majors.
All opinions and insights shared represent the author's own views on current market conditions. Please do your own research before making investment decisions. Neither the writer nor the publication assumes responsibility for your financial choices.
Sponsored content and affiliate links may appear on our site. Advertisements are marked clearly, and our editorial content remains entirely independent from our ad partners.
Zcash price continues to attract massive market attention despite undergoing a sharp 9% pullback from…
Bitcoin pumped $1,400 in 60 minutes, reclaimed $78,000, added $30 billion in market cap, and…
Something interesting is happening inside the Ripple ecosystem right now and most people are only…
The UK government sanctioned several crypto firms on May 26 under its Russia sanctions regime,…
OKB price woke up fast today, surging more than 15% after OKX rolled out Exchange…
Bitcoin price continues to consolidate between $76K and $77K, showing resilience despite a sharp decline…
