XRP Sees Unprecedented Short-Selling Frenzy Amidst Surprising 27% Rally

Table of Contents XRP funding rates on Binance have remained in negative territory for nearly three months. This comes even as the token posted a 27% gain during the same period. The altcoin market lost over $544 billion during a broader correction driven by global uncertainty. However, capital repositioning that began in early February has added roughly $125 billion back to the Total3 index. The market dynamic now appears to be shifting. The Total3 index tracks the crypto market cap excluding Bitcoin, Ethereum, and stablecoins. During the recent correction, this index shed more than $544 billion in value. Altcoins were the first sector to feel pressure as global market sentiment turned uncertain. Since early February, however, capital has begun moving back into the altcoin space. The Total3 index has recovered roughly $125 billion over that period. This recovery points to a gradual return of risk appetite among crypto traders and investors. Despite the recovery, many investors have maintained a bearish stance. A large portion of the market continues to bet against the current upward move. This creates a notable disconnect between price action and trader sentiment. According to analyst Darkfost, this bearish positioning is especially visible on Binance. Funding rates for XRP have stayed negative for close to three months. This marks the longest and most negative stretch in recent history for the token. 📉 During this correction, driven by an uncertain global backdrop, the altcoin sector was the first to suffer the consequences. As a result, the Total3 index, which represents the crypto market cap excluding $BTC, $ETH, and stablecoins, lost more than $544B. However, the… pic.twitter.com/JZToj19FmI — Darkfost (@Darkfost_Coc) May 9, 2026 Darkfost aggregated XRP funding rates over a 30-day period to better capture prevailing derivatives sentiment. The data shows a persistent bearish bias even as XRP climbed 27% during the same timeframe. This kind of divergence between price and sentiment is rare and often meaningful. When a strong bearish consensus forms after a correction of more than 60%, history suggests a reversal may follow. A similar setup developed in April 2025 when XRP traded around $1.25. A bullish recovery followed, eventually driving a 126% advance from that level. The pattern shows how crowded short positions can fuel sharp price recoveries. As bearish traders get squeezed, buying pressure tends to accelerate. This dynamic has played out more than once in XRP’s trading history. At current levels, XRP trades around $1.41 as of writing, still well below its previous cycle highs. The combination of negative funding rates and recovering market cap adds to the case for watching this token closely. Traders familiar with derivatives data will recognize the setup as one worth monitoring.