XRP Rebounds 50% as Negative Funding, Falling Reserves and ETF Inflows Signal a Potential Bottom

XRP has staged a sharp recovery after hitting a 15-month low earlier in February. The price rose 50% to a high of $1.67 from the low of $1.12 on February 6, signaling renewed buyer interest after weeks of heavy pressure. Although XRP is still trading more than 60% below its multi-year peak of $3.66, several on-chain and derivatives indicators suggest the recent dip could mark a local low.

Negative funding at multi-month lows sets the stage for XRP reversal

Exchange data shows a steady decline in XRP balances over the past two years. According to Glassnode, supply on the exchange fell to 12.9 billion XRP this week, a level last seen in May 2021. Lower balances on trading platforms often indicate reduced intent to sell as holders move tokens to cold storage or long-term custody.

Image source: Glass junction

Binance’s XRP reserve has fallen to approximately 2.57 billion XRP, with both the 50-day and 100-day simple moving averages with a downward trend. Despite prices being near recent lows, reserves continue to shrink. PelinayPA, a contributor to CryptoQuant, noted that such a structure increases the likelihood of a short squeeze, especially if selling pressure subsides and buyers regain control.

The financing percentages provide further insight into the recent positioning. Binance funding fell to -0.028% as short positions and capitulation under leveraged long positions.

History shows that extremely negative financing can precede strong turnarounds. Similar conditions in April 2025 were followed by a 65% rally from $1.60 to $2.65 as short sellers were forced to cover their positions. Similar developments in late 2024 also led to rapid upward moves.

Open interest collapse and rising volume point to recovery

At the same time, open interest on futures has fallen sharply. CoinGlass data shows XRP open interest falls to $2.53 billiondown 55% from $4.55 billion in early January. Falling open interest during a correction usually signals deleveraging rather than an aggressive new short position. Reduced leverage can create a cleaner recovery setup as new demand enters the market.

Several technical and derivatives signals are now around the recent low of $1.12:

• The deeply negative financing rates reflect an overcrowded short position.
• Open interest The contraction signals forced liquidations and position resets.
• Foreign exchange reserves continue to decline even as prices stabilize near all-time lows.
• Historical patterns show that similar conditions preceded sharp upturns.

Spot market data also points to renewed buyer activity. Analysis of the spot taker’s cumulative volume delta (CVD) over a 90-day period shows that aggressive buyers have regained control. Until recently, CVD remained neutral, reflecting hesitation among participants. On Tuesday, the metric turned positive, indicating stronger buy-to-sell volume.

Image source: CryptoQuant

Persistent positive CVD values ​​would imply that buyers are accumulating at lower levels. Past recoveries have often started with a similar shift in spot dominance, followed by a price acceleration.

Capital rotates into XRP products amid broader crypto fund outflows

Spot XRP exchange-traded funds have continued to attract capital despite the broader market downturn. Since their launch in November 2025, these products have registered inflows on 53 out of 59 trading days.

Image source: SoSoValue

Data from SoSoValue shows that spot Even as global crypto investment products posted four consecutive weeks of outflows totaling $173 million, XRP ETPs led the weekly inflows with $33.4 million for the week ending February 13.

Continued demand for ETFs during price weakness indicates steady institutional interest. If spot buying continues while leverage remains moderate, XRP could build a base above recent lows. Sustained follow-through will depend on broader market conditions, but current numbers indicate that $1.12 could mark a major turning point in the near term.