the XRP Funding rates saw a sharp rise today, rising by 158.19% on Friday, March 27.
Over the past 24 hours, the XRP funding rate, a periodic fee that traders pay each other in perpetual futures to keep the contract price fixed to the spot price, rose to 0.0028, according to the market. Data Shared by Cryptoquant. This followed a negative net funding rate phase on Thursday, which meant long positions were briefly paying premiums to short sellers.
A rise into positive territory indicates that a greater proportion of derivatives traders have shifted towards bullish positions. However, open interest (OI) – the total value of active and unsettled derivatives contracts across all exchanges – fell 0.25% over the past 24 hours to $823.94 million after recently being To reach the weekly peak.
The marginal decline in OI, despite the upward funding rate, suggests that the move reflects a repositioning of existing capital rather than new speculative inflows from new market participants.
Why is the price of XRP falling amid positive funding rates?
Despite derivatives traders’ bullish bias, the spot price of XRP has fallen 1.27% over the past 24 hours to around $1.34 at reporting time. This pushed the asset’s weekly decline to more than 7%, thus compressing its market value to around $82 billion.
This divergence between bullish derivative sentiment and falling spot prices is a recognized market pattern, often driven by mechanical liquidation cascades that bypass traders’ positions. In the case of XRP, the primary catalyst was a long squeeze, where falling prices forced over-leveraged traders to sell or liquidate, amplifying the decline through cascading short squeezes.
In the past 24 hours, around $6.69 million worth of XRP derivatives positions were liquidated, mostly impacting longer-term traders and confirming that the long squeeze was the main dynamic.
