The price of XRP has remained under pressure in recent weeks, but a deeper market signal has caught the attention of seasoned traders: the funding rate for XRP perpetual futures has turned negative. This shift raises an important question — does this indicate growing bearish momentum, or could it present a contrarian buying opportunity?
On March 19, Ripple CEO Brad Garlinghouse announced that the company had reached a settlement with the U.S. Securities and Exchange Commission (SEC), resolving a long-standing legal battle over whether XRP was an unregistered security. The news triggered a sharp rally, with XRP surging to $2.59. However, the momentum didn’t last. By March 31, the price had pulled back 22%, settling at $2.02.
While the regulatory clarity was a positive development, the subsequent price action and derivatives data suggest that market sentiment may be cooling. XRP is currently trading 39% below its all-time high of $3.40 reached on January 16. More tellingly, the futures market is now showing signs of strong bearish positioning.
What a Negative Funding Rate Tells Us About Market Sentiment
In perpetual futures markets, the funding rate acts as a balancing mechanism between long and short positions. When more traders are long (bullish), the funding rate turns positive, meaning longs pay shorts. Conversely, when short positions dominate, the funding rate goes negative — shorts pay longs.
👉 Discover how funding rates can reveal hidden market trends before price moves
A negative funding rate typically signals that bearish traders are using leverage to bet on further downside. For XRP, the 8-hour funding rate recently dipped to -0.14%, translating to a weekly cost of approximately -0.3% for short-sellers. This means traders holding short positions are actively paying to maintain their bets against XRP.
While this may seem like a clear bearish signal, experienced traders know that extreme sentiment can sometimes precede reversals. Overly crowded short positions can lead to short squeezes if positive news or macro conditions shift unexpectedly.
Margin Data Reveals a Divergence Between Futures and Spot Markets
To get a fuller picture, it’s essential to look beyond futures and examine spot margin activity. Unlike futures, which are zero-sum contracts, margin trading allows investors to borrow assets to buy or sell XRP directly — offering insight into actual demand.
According to data from OKX, the ratio of long to short margin positions for XRP stands at 2:1 in favor of longs. This is near the lowest level in over six months. Historically, when this ratio exceeds 40:1, it signals excessive bullishness and often precedes pullbacks. Conversely, ratios below 5:1 are typically seen as bullish contrarian indicators, suggesting that fear has outweighed greed.
This divergence is critical: while futures traders are leaning bearish and paying to short XRP, spot margin traders are still predominantly on the long side — but with caution. This could indicate that long-term holders are accumulating at lower prices, even as short-term traders hedge against further downside.
Trump’s Endorsement Boosts XRP’s Visibility
Despite the cautious tone in derivatives markets, XRP has seen a surge in mainstream attention — not just from regulators, but from political figures as well.
On March 2, former U.S. President Donald Trump mentioned XRP, along with Solana (SOL) and Cardano (ADA), as potential candidates for a national digital asset strategic reserve. The comment sparked widespread discussion across financial and crypto circles.
This visibility translated into real-world interest. Google Trends data shows that XRP search volume briefly surpassed Bitcoin (BTC) during the period of March 2–3. A similar spike occurred on March 19, following Garlinghouse’s SEC update.
Such spikes in search interest often correlate with increased retail participation — a key driver of sustained price rallies in altcoins.
Institutional Adoption Adds Long-Term Support
Market sentiment isn’t shaped by news and speculation alone. Real infrastructure developments also play a crucial role.
On March 26, Interactive Brokers — a major traditional financial brokerage — announced expanded crypto support, adding trading for XRP, SOL, ADA, and DOGE. The platform already offered BTC, ETH, LTC, and BCH since 2021.
This move signals growing institutional confidence in XRP as a viable digital asset. Unlike speculative memecoins, XRP benefits from established liquidity, enterprise use cases via RippleNet, and increasing regulatory clarity.
👉 See how institutional adoption is reshaping the future of digital assets
These fundamentals suggest that while short-term price action may be volatile, the long-term outlook for XRP remains supported by real-world utility and growing market access.
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Frequently Asked Questions (FAQ)
Q: What does a negative funding rate mean for XRP?
A: A negative funding rate means that short-sellers are paying longs to maintain their positions. It reflects dominant bearish sentiment in the futures market but can also set the stage for a short squeeze if prices rebound.
Q: Is a low long-to-short margin ratio bullish or bearish for XRP?
A: A low ratio (below 5:1) is often considered bullish in the long term because it indicates reduced speculative excess and potential accumulation by strong hands.
Q: Did Ripple win its case against the SEC?
A: Yes, on March 19, Ripple announced it had reached a settlement with the SEC, with the court ruling that XRP is not an unregistered security when sold to retail investors.
Q: Can Trump’s comments affect XRP’s price?
A: While not directly impactful, high-profile endorsements increase public awareness and can drive retail interest, especially during periods of market optimism.
Q: Why is Interactive Brokers adding XRP trading significant?
A: It reflects growing institutional acceptance of XRP as a legitimate digital asset, improving accessibility for millions of traditional investors.
Q: Could XRP see a short squeeze soon?
A: If positive catalysts emerge — such as broader market recovery or new adoption news — the current high short concentration could trigger a rapid price rebound as bears rush to cover.
👉 Monitor real-time funding rates and avoid getting caught in market traps
Conclusion
The current negative funding rate for XRP reflects short-term bearish sentiment in the derivatives market. However, margin data, growing institutional support, and heightened public interest suggest that selling pressure may be nearing exhaustion.
Smart traders don’t just follow the crowd — they look for divergences. With long-term holders still active in the spot market and macro visibility improving, a reversal could be closer than it appears.
While past performance is no guarantee of future results, the combination of regulatory clarity, political attention, and infrastructure growth positions XRP as one of the most watched altcoins in 2025. Whether you’re considering going long or short, understanding these layered market signals is key to making informed decisions.