Market indicators for XRP are currently flashing signs that historically preceded massive price surges. Specifically, “latent” buying pressure stemming from lopsided derivatives bets is putting short sellers in a precarious position.
The “Short Squeeze” Catalyst
On exchanges like Binance, XRP funding rates have turned predominantly negative over the last two months. This suggests that the majority of leveraged traders are betting on further price declines. However, these traders must pay a fee to keep their bearish positions open, a situation that often sets the stage for a “short squeeze.”
According to on-chain analyst Darkfrost, this bearish consensus is a double-edged sword. While shorts create immediate selling pressure, they also represent “latent buying pressure.” If XRP’s price begins to tick upward, these short sellers may be forced to buy back their tokens to limit losses, effectively fueling a rapid move higher.
Historical Context: * August-September 2024: Similar negative funding preceded a 50% recovery.
- April 2025: A nearly identical setup led to a massive 100% rally, pushing XRP to a multi-year high of $3.66.
Critical Technical Levels to Watch
As of January 2026, XRP is hovering near a vital support zone. To maintain its bullish trajectory, the asset must navigate the following levels:
- The Floor ($1.80–$2.00): This region has acted as a launchpad for previous rallies. If XRP decisively falls below $1.80, the bullish thesis of “latent pressure” will likely be invalidated.
- The Psychological Barrier ($2.00): This remains a difficult level to clear. Data from Glassnode shows that retests of $2.00 have recently coincided with weekly realized losses of $500 million to $1.2 billion, indicating that many retail holders are using these bounces to exit their positions rather than double down.
- The Bullish Trigger ($2.22): Reclaiming the 50-week exponential moving average (EMA) at $2.22 is essential for a sustained trend reversal.
The Bear Case: If XRP fails to turn $2.22 into support and loses the $1.80 floor, bears will likely target the 200-week EMA, situated around $1.40.
