On-chain data reveals a sharp deterioration in trader sentiment surrounding XRP, with derivatives positioning shifting decisively into defensive territory. According to a report from CryptoQuant analyst Arab Chain, the funding rate for the XRP perpetual pair on Binance has plunged to approximately -0.028%, marking its lowest level since April 2025.
A deeply negative funding rate indicates that traders holding short positions are being paid a premium by those holding long positions. This dynamic signals that market participants are increasingly willing to incur higher costs to hedge against or bet on further downside for XRP, reflecting a clear bearish shift in near-term expectations. This sentiment shift has developed alongside XRP's price decline, with the asset trading around the $1.44 to $1.46 level, reinforcing the building selling pressure.
Historically, such extreme negative funding rates often appear during the advanced stages of a downtrend, when speculative positioning is already heavily skewed to the short side. While these conditions have sometimes preceded temporary rebounds driven by short-covering, they do not necessarily indicate a durable trend reversal, especially if the broader market structure remains weak.
From a behavioral perspective, the current data points to heightened caution and a reduced appetite for risk in the XRP derivatives market. Traders appear more focused on protection than on seeking upside exposure, leaving the market sensitive to sudden shifts in sentiment. Analysts note that this crowded short positioning could amplify any short-term price moves should unexpected positive catalysts emerge, but for now, the derivatives market remains firmly defensive as XRP trades under persistent pressure.
