XRP funding rate spikes 160% in a day; Here’s what it means

The XRP funding rates have experienced a sharp uptick today, surging by 158.19% on Friday, March 27.

Over the past 24 hours, the XRP funding rate, a periodic fee traders pay each other in perpetual futures to keep the contract price anchored to the spot price, surged to 0.0028, according to market data shared by CryptoQuant. This followed a net-negative funding rate phase on Thursday, meaning longs had briefly been paying premiums to short sellers.

The rise into positive territory signals that a greater share of derivatives traders have shifted toward bullish positioning. However, its Open Interest (OI) – the total value of active and unsettled derivatives contracts across all exchanges – edged down 0.25% over the past 24 hours to $823.94 million after recently hitting a weekly peak.

The marginal decline in OI, despite a bullish funding rate, suggests the move reflects repositioning of existing capital rather than fresh speculative inflows from new market participants.

Why is XRP price dropping amid positive funding rates?

Despite derivatives traders pricing in a bullish tilt, XRP’s spot price fell 1.27% over the past 24 hours to approximately $1.34 at the time of reporting. This has pushed the asset’s weekly decline to over 7%, hence compressing its market capitalisation to approximately $82 billion.

This divergence between bullish derivatives sentiment and falling spot prices is a recognized market pattern, often driven by mechanical liquidation cascades that override trader positioning. In XRP’s case, the primary catalyst was a long squeeze, in which the price drop forced overleveraged long traders to sell or be liquidated, amplifying the decline through cascading selling pressure.

In the last 24 hours, about $6.69 million in XRP derivatives positions were liquidated, mostly affecting long traders and confirming that the long squeeze was the main dynamic.