XRP is trading at $1.42, up 1.21% over the past 24 hours. The larger shift may be taking shape in derivatives rather than spot. CryptoQuant author and analyst Darkfost said on X that XRP funding rates on Binance have moved into what he called an “extreme negativity” phase, a sign that short positioning is piling up in the perpetual futures market.
Binance derivatives show a crowded bearish trade
According to Darkfost, the signal emerged while XRP traded in the $1.35 to $1.50 range. Even after a roughly 60% correction, most derivatives traders have continued to position for downside. That leaves the bearish trade increasingly crowded. In markets like this, one-sided consensus can create the conditions for a squeeze rather than a clean continuation lower.
His point is simple: when traders line up too heavily on one side, price action can punish that majority. For XRP, that would mean shorts getting forced out if momentum turns.
A similar setup appeared in April 2025 before a sharp rally
Darkfost pointed to an earlier case in April 2025, when Binance funding rates for XRP also dropped into an extreme negative zone. At the time, XRP was trading near $1.60 and sentiment was weak. By mid-July, the token had climbed to $3.65. That move became a reference point for traders watching whether heavily skewed short positioning can trigger another squeeze.
He also cited CryptoQuant historical data showing that periods of deeply negative funding rates have often been followed by short-term rebounds or corrective rallies in XRP. The signal reflects positioning and sentiment. It does not confirm that a new long-term uptrend is already in place.
The setup needs a trigger, and the broader market is still fragile
Darkfost was explicit that this pattern “does not guarantee a lasting trend reversal”. It is a condition worth tracking, not a standalone buy signal. A squeeze can happen quickly, but it usually needs some form of catalyst to convert positioning stress into a sustained price move.
The macro backdrop remains shaky. The report said rising tensions involving the United States, Israel, and Iran, including reports of coordinated strikes and drone activity, have pushed investors toward safer assets and weighed on risk markets such as crypto and silver. Even with altcoins excluding Ethereum, measured by Total 3, adding about $75 billion in market capitalization since the start of February, uncertainty has not gone away.
CLARITY Act stands out as the near-term catalyst to watch
The article identified the CLARITY Act as the main near-term variable after a sharp rise in search interest this week. If passed, it would remove what the report described as the last major regulatory barrier preventing institutional funds from holding XRP directly. That matters because an oversold derivatives structure tends to be more explosive when paired with a regulatory or demand-driven catalyst.
The report also drew a parallel with the 2025 rally, noting that the move gained traction after the SEC settled with Ripple in May 2025. Whether the CLARITY Act can serve a similar role is framed as the central question for XRP heading into March 2026.