Is an XRP short squeeze loading? On-chain data weighs in

XRP price could be preparing for a potential short squeeze, as bearish positioning on the Binance exchange shows strong consensus as of April 17.

The XRP Funding rates – periodic payments exchanged between long and short traders that are designed to keep futures prices anchored to the spot price – on the largest cryptocurrency exchange by traded volume have remained predominantly negative year-to-date (YTD), according to analytics from CryptoQuant. Historically, negative Funding rates indicate that bearish bets are dominant as more traders anticipate further price declines, and vice versa.

A similar setup of negative Funding rates was observed after the XRP price capitulation in the first quarter of 2025. As more Binance trades shifted to a bearish outlook, the token rallied from around $1.6 to an all-time high (ATH) above $3.6 over the subsequent few months, representing a 127% gain.

​With XRP traders heavily bearish on Binance YTD, a potential short squeeze could recur in the near future, catalyzing a fresh bull rally.

Why an XRP short squeeze could happen soon

An XRP short squeeze, triggered by a prolonged negative funding rate, could happen in the near term amid the altcoin’s rebound. Furthermore, despite the bearish sentiment from derivatives traders, the price of this token has gained 7.89% over the past seven days, trading at approximately $1.45 at the time of reporting.

Additionally, institutional demand for this token has rebounded over the past week, led by spot XRP exchange-traded funds (ETFs), as Finbold previously noted. Amid easing geopolitical tensions in the Middle East, investors have gradually turned to crypto assets, which had previously been viewed as risky.

As such, a potential XRP short squeeze could fuel a rally towards the next major liquidity zone at $1.80, which served as strong support in 2025.