Short Bets Piling Up, Yet Price Jumps... XRP Is Unusual

▲ Ripple (XRP) ©

As short positions betting on XRP's decline have accumulated excessively, the possibility of a short squeeze, which could push the next rally, is once again emerging to the forefront of the market.

According to cryptocurrency media Watcher.Guru on April 17 (local time), XRP funding rates on Binance have largely remained negative this year, indicating a dominant trend of bearish bets. The funding rate is a periodic payment exchanged between long and short investors to align futures prices with spot prices. A consistently negative rate is interpreted as market participants placing more weight on further price declines.

Such a structure has a precedent of leading to strong rebounds in the past. Even after a sharp drop in XRP in Q1 2025, Binance's funding rate remained in negative territory, and in the following months, XRP's price surged from approximately $1.6 to an all-time high exceeding $3.6. This represented a rebound of 127%. With a similar concentration of bearish positions recurring, the market is watching for the possibility of the same pattern being replicated.

Actual price movements also support this. Despite the overall bearish sentiment in the derivatives market, XRP rose by 7.89% over the past 7 days, trading at approximately $1.45. This means that even with a predominance of short positions, the spot price is holding steady or even rising, suggesting that if short positions are liquidated all at once, the upward momentum could further increase.

The recovery of institutional demand is also considered a variable. Recently, fund inflows have increased again, particularly around XRP spot ETFs, and risk asset preference is gradually recovering with the easing of geopolitical tensions in the Middle East. The media points out that the current structure, where bearish bets in the derivatives market and the recovery of spot and institutional demand occur simultaneously, is a backdrop that increases the likelihood of a short squeeze.

Going forward, the market's attention is directed towards the $1.80 level. This price point was a key liquidity zone that acted as a strong support level in 2025. The media analyzed that if XRP maintains its upward trend despite negative funding rates, as it is currently, a short squeeze could be triggered, leading to a further rally to $1.80.

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