Xrp Buy Signal Flashes As Funding Rate Turns Deeply Negative: Will...

XRP’s slide below $2 pushed its funding rates to extreme lows, an occurrence that generally incentivizes bulls to pile in. What’s holding traders back this time?

XRP derivatives are dominated by bears as the funding rate turns deeply negative and open interest remains stagnant.

XRP ETF volumes and declining XRP Ledger TVL show fading interest in the XRP ecosystem, reducing the chances of a near-term price rebound.

XRP (XRP) fell 9% over two days after being rejected at $2.18 on Tuesday. The slide below $2 created brief turmoil in derivatives markets as the cost of holding leveraged bearish positions jumped to a two-month high. Traders worry that XRP could weaken further given the slowdown in exchange-traded fund (ETF) activity and the decline in XRP Ledger deposits.

The funding rate on XRP perpetual futures fell to -20% on Thursday, the lowest since the Oct. 10 crash. Negative readings indicate that sellers (shorts) pay buyers (longs) to maintain open positions, signaling a near-total lack of demand from bullish traders. In more balanced conditions, the rate typically ranges from 6% to 12% to account for the cost of capital, with longs covering that fee.

Such deeply negative funding rates are rare and usually short-lived. Some analysts even view them as potential reversal signals, though most historical examples emerged during flash crashes rather than extended corrective phases. In addition, falling appetite for leverage has led some to question whether traders have simply stepped back from XRP.

Aggregate open interest in XRP futures stood at $2.8 billion on Thursday, unchanged from the prior week. Still, leveraged positions have not recovered the $3.2 billion level seen in late November. The data suggests XRP bears are reluctant to increase exposure, especially after the token has already dropped 45% since reaching $3.66 in July.

Part of the muted appetite for bullish XRP positions can be tied to declining activity in the US-listed XRP ETFs. Traders entered November with strong expectations, but inflows and trading activity dropped sharply after just three weeks, leaving assets under management stuck near $3.1 billion, according to CoinShares data. For comparison, Solana ETFs hold $3.3 billion in assets.

Daily volume on US-listed XRP ETFs rarely exceeds $30 million, which significantly dampens interest from institutional desks. Fading demand for the XRP Ledger is another source of frustration for holders. Even the Ripple-backed stablecoin Ripple

Source: CoinTelegraph