XRP is creeping up around 1.95 USD in the context of negative funding rates and a concentration of liquidation clusters around 2.00 USD, creating pressure that forces short sellers to close their positions and increasing the risk of a 'short squeeze' in the short term.
Negative funding rates reflect a defensive sentiment in the derivatives market, but history shows that this state often leads to a 'sell-off' and a strong rebound when short positions are forced to close. For XRP, the range of 2.00–2.05 USD is emerging as a squeeze trigger rather than a mere resistance.
MAIN CONTENT
The XRP funding rate turns negative during the accumulation phase, indicating that the short selling side is dominant and the sentiment is 'risk-off'.
A large liquidation cluster concentrated at 1.98–2.05 USD increases the risk of a short squeeze as the price holds around 1.95 USD.
If funding flips to positive, it could signal confirmation of a more sustainable upward trend; if it remains negative for an extended period, the risk of a decline and increasing open interest should be monitored.
XRP is under short pressure when the funding rate remains negative
Negative funding rates indicate that traders lean towards short positions on perpetual contracts, and the recent price bounce could trigger 'cover' activity that strengthens the short-term upward momentum.
Accumulated short positions while prices move sideways often make the market sensitive to bounces from spot. When the price stabilizes around 1.95 USD and starts to push higher, short orders may be forced to close, contributing to additional buying power.
In previous cycles, negative funding rates appeared when sellers flooded the derivatives market during the accumulation phase. In the August–September 2024 period, weak spot momentum pulled funding below 0. By the April 2025 correction, uncertainty and profit-taking increased the demand to hedge downside, repeating the state of negative funding.
When defensive sentiment spreads, long-term holders often 'stay on the sidelines', and volatility is compressed. However, the history described in the original content shows that this level of pessimism often leads to dwindling selling pressure. When funding normalizes, prices may surge sharply, reflecting a return of risk appetite.
If negative funding continues, investors should monitor the potential for a decline to appear and open interest to increase simultaneously, as this could be a signal that leverage is accumulating defensively. Conversely, when funding flips to positive, it could be a more favorable condition for a re-accumulation strategy.
The XRP derivatives market reflects a 'risk-off' sentiment
Data shows that the funding rate and XRP price tend to move in sync over cycles; funding dropping below 0 often accompanies cautious states and reduced leverage.
According to data from CoinGlass, the XRP funding rate can be tracked on the Funding Rate XRP page on CoinGlass. The original content describes the correlation between funding and price through various market cycles.
From 2021 to mid-2023, XRP traded around 0.40–0.60 USD while funding remained flat to slightly negative, reflecting low levels of 'conviction'. By the end of 2024, the price surged above 3.00 USD as funding jumped to nearly +0.10%, indicating strong long leverage increase.
This imbalance is then accompanied by rapid corrections. In 2025, XRP corrected to the 2.00–2.50 USD range when funding slid below 0. This trend usually means traders reduce leverage and switch to defense, while slight negative funding is sometimes associated with the bottom formation process and a 'reset' of the trend.
The 2026 structure is described as stronger than previous cycles
The original content argues that the context of 2026 differs in that it has structural elements, laying the foundation for demand rather than relying solely on speculative enthusiasm.
Compared to cycles dominated by 'hype' or legal resistance, the original content emphasizes that 2026 has a more foundational setup. A key factor is the reduction of 'regulatory overhang' after the case between the SEC and Ripple concludes in 2025, thereby improving institutional access in the USA.
The original content also mentions that the spot XRP ETF will launch later and notes 1.3–1.4 billion USD of stable inflows, which 'tightens' the liquidity supply. Additionally, there are expansion activities such as acquisitions, expanding the RLUSD stablecoin, and new licenses to strengthen the real-world payment/settlement use case.
When demand is anchored to infrastructure, liquidity, and institutional acceptance, the market can form a higher 'price floor' compared to periods mainly driven by speculative expectations. However, short-term trading signals still need to closely monitor the funding rate and liquidation structure.
The liquidation cluster at 1.98–2.05 USD increases the risk of a short squeeze
The liquidation heatmap shows a dense cluster around 1.98–2.05 USD, particularly just above 2.00 USD; if the price breaks above this area, a chain of short liquidations may trigger rapid upward movement.
According to the Heatmap on CoinGlass at the XRP liquidation Heatmap, liquidation clusters are concentrated in the 1.98–2.05 USD range, with the largest density described as just above 2.00 USD.
The original content states that the price is around 1.95 USD, while the liquidation 'pockets' below are not too strong as they are below 1.90 USD. This creates an imbalance: the liquidation pressure above is thicker, making the 2.00–2.05 USD area gradually become a squeeze trigger rather than just a resistance zone.
When the price holds above the 1.93–1.94 USD range, the 'short exposure' level may accumulate above. Each additional accumulation phase increases the 'strain' on short positions. In similar described phases, even a small purchase of spot can trigger a domino effect causing shorts to be liquidated en masse.
In this context, timing and market structure may be more important than one-sided forecasts. The original content concludes that the squeeze risk and signs of dwindling selling pressure overshadow pure trend confidence, thus the scenario with a higher probability in the short term still leans towards upward, even though the price is still accumulating.
Signals to monitor: funding flips to positive
When the funding rate shifts from negative to positive, it may confirm that buying pressure is more dominant, rather than just a bounce due to short covering.
The original content recommends monitoring the 'funding flip' to positive as a confirmation of the strength of trend maintenance. In practice, positive funding often means that the long side pays fees to the short side, reflecting increased demand for holding long leveraged positions.
Conversely, if funding remains negative, the market may still be sensitive to 'flush' moves and volatility due to accumulated defensive leverage. Observing both the funding rate and open interest simultaneously helps assess whether short pressure is increasing (fueling a squeeze) or downside risks are expanding.
Frequently Asked Questions
What does the negative funding rate of XRP indicate?
Negative funding rates often indicate that the derivatives market leans towards the short side, cautious sentiment, and increased demand to hedge downside. This state sometimes sets the stage for a bounce if rising prices force shorts to close their positions.
Why is the 2.00–2.05 USD range important for XRP?
The liquidation heatmap shows many clusters of liquidations concentrated at 1.98–2.05 USD, especially above 2.00 USD. If the price enters this area, a chain of short liquidations could occur and push the price up quickly.
What signals should be monitored to confirm a more sustainable upward trend?
An important sign is the funding rate flipping from negative to positive, as this could reflect active long pressure, not just a bounce due to short covering. At the same time, open interest should be monitored to assess which way leverage is increasing.
Source: https://tintucbitcoin.com/phe-ban-khong-xrp-bi-ep-squeeze-hinh-thanh/
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