XRP's derivatives market is exhibiting extreme bearish positioning, with its funding rate dropping nearly 80% on Thursday, February 19. This negative funding indicates that traders holding short positions are paying those with long positions, signaling aggressive short bias. The decline was accompanied by a drop in open interest, showing leveraged traders are de-risking as XRP's spot price trades below its short-term moving average and a key Fibonacci support level.
Technical indicators add to the gloomy picture, with XRP's Relative Strength Index (RSI) approaching oversold territory. The broader market sentiment is captured by the Crypto Fear & Greed Index printing an "Extreme Fear" reading. Analysts note that Bitcoin dominance is climbing, suggesting capital is rotating away from altcoins like XRP. Historical data shows that such extreme short bias has sometimes preceded sharp reversals, as seen during the cyclical bottom for XRP in 2022 following the FTX collapse.
Simultaneously, Ethereum is experiencing a structural shift in market sentiment. According to a CryptoQuant report, while ETH is trading near price levels similar to October 2024 (~$1,960 vs. $2,400–$2,600 back then), its derivatives positioning tells a fundamentally different story. In October 2024, aggregate funding rates across major exchanges like Binance, OKX, and Bybit were elevated between 0.055% and 0.097%, reflecting strong long positioning.
Today, the aggregate funding rate has compressed to approximately +0.030%, with Binance shifting into negative territory at -0.0034%. This means shorts are paying longs on the world's largest derivatives venue, a clear reversal. Other exchanges like OKX and Bybit show near-neutral conditions. Binance has maintained negative funding for nearly two weeks, reaching as low as -0.012% in certain sessions, signaling persistent structural caution rather than a short-lived panic. This shift indicates trader psychology has been reshaped by the volatility of a rally to $3,300 followed by a 40% decline in under six weeks.
