I still remember the day XRP hit $3.65 back in July. The timeline was pure euphoria, people were calling for $10, even $20. Fast forward to today and the vibe is completely different. The price is quietly grinding lower, shorts are stacking up, and the question on everyone’s mind is painfully simple: are we about to revisit $1.90?
Honestly, the chart doesn’t look pretty right now. But markets rarely move in straight lines, and sometimes the most crowded trade is exactly the one that blows up. Let’s dig into what’s actually happening beneath the surface.
The Weight of Growing Short Interest
One of the loudest alarm bells right now is the behavior in the perpetual futures market. Funding rates have been negative for days and are trending even lower. That means shorts are paying longs to keep their positions open – a classic sign that bearish conviction is extremely high.
When funding goes deep negative, two things usually happen eventually: either the price keeps dropping and the bears get rewarded, or the pain becomes too much and we get a sharp short squeeze. We’ve seen both scenarios play out with XRP many times before.
Right now the market is heavily tilted toward the first outcome. Open interest is rising while price is falling – textbook distribution. But I’ve learned never to underestimate how fast sentiment can flip when leverage gets this stretched.
What Negative Funding Actually Tells Us
Negative funding isn’t just “bears are in control.” It’s a measure of how much bears are willing to pay to stay short. The deeper it goes, the more expensive it becomes to keep betting against the price.
- Below -0.01% = mild bearish bias
- Below -0.05% = strong bearish conviction
- Below -0.1% = extreme territory (short squeeze risk rises sharply)
We’re already knocking on that third door. History shows that when XRP funding stays crushed for more than a week, the eventual snap-back can be violent. Remember April 2024? Almost identical setup, and price ripped almost 60% in four days when the squeeze finally triggered.
On-Chain Velocity Just Hit a 2025 High
Here’s something most headline scanners completely missed. XRP’s network velocity – how quickly tokens change hands – just recorded its highest reading of the entire year.
Velocity spiking during a downtrend usually means one of two things: either smart money is distributing to weak hands (bearish), or coins are being positioned for a major move (could be bullish). The tricky part is we rarely know which one until after the fact.
What we do know is that high velocity + compressed price + extreme funding = explosive potential in either direction. I’ve been doing this long enough to get a little nervous when all three line up at once.
Reading the Daily Chart Without Rose-Tinted Glasses
Let’s get technical for a minute. On the daily timeframe, XRP is trapped inside a clear descending channel since the July top. Price is currently sitting right on the lower trendline near $2.13-$2.15.
The scary part? All the major moving averages (50, 100, 200) are stacked above price like a brick wall. That’s the definition of a downtrend. Even the 20-day MA, which had been acting as dynamic support, just flipped bearish.
Bollinger Bands have tightened dramatically – we’re seeing the narrowest range since early October. Historically, when XRP’s bands squeeze this hard, the breakout tends to be sharp. The only question is direction.
“Tight Bollinger Bands are like a coiled spring. The longer the consolidation, the more violent the eventual move.”
Key Levels I’m Watching Right Now
If you’re trading this (or just trying to sleep at night), these are the only levels that matter:
- $2.08 – $2.00 → Major psychological zone and previous breakout level. Losing this opens the trap door.
- $1.90 – $1.96 → The make-or-break support. This is where the real panic would start.
- $2.25 – $2.35 → First real resistance overhead. A move here would likely trigger massive short covering.
- $2.60 → Invalidates the entire bear case. Until we clear this, I stay cautious.
Right now price is hugging that $2.08 area like it’s the last lifeboat. A daily close below and the path to $1.90 becomes almost scripted.
Could We Actually See a Short Squeeze?
Never say never. The setup for a squeeze is actually improving by the day. Liquidation heatmaps show massive short liquidity stacked between $2.25 and $2.40 – exactly where a lot of analysts say price “can’t” go.
Add in the fact that spot CVD (cumulative volume delta) has been quietly ticking higher while price makes lower lows – that’s divergence. Someone is accumulating while the crowd panics.
In my experience, when the market gets this one-sided, the opposite move often blindsides everyone. I’m not calling for $3 tomorrow, but a 15-25% rip higher to liquidate over-leveraged shorts would not shock me at all.
So… $1.90 or Squeeze? My Take
Here’s where I land after staring at this setup for days.
The path of least resistance is still lower. The trend is down, sentiment is awful, and leverage is heavily short. A flush to $1.90-$2.00 feels more likely than not in the next couple of weeks.
That said, the risk/reward for trying to short here is getting worse by the day. One strong daily close above $2.25 and the whole narrative flips. Those same shorts that feel invincible today could be running for the exits tomorrow.
My personal approach? I’m staying mostly in cash and watching those key levels like a hawk. If we lose $2.00 cleanly, I’ll consider a small short with a tight stop. If we somehow reclaim $2.35 with volume, I’m flipping long and riding the squeeze.
Either way, volatility is coming. And in this market, that’s when the real money is usually gets made.
Whatever happens, just remember: the crowd is rarely right when everyone is this certain. Stay nimble, manage your risk, and don’t marry a direction.
Because in crypto, the only guarantee is that someone is about to be very wrong – and very surprised.
