XRP funding rates have seen a sharp daily decline, dropping by no less than 240% on Tuesday, July 21.
The drop has coincided with an XRP rally, as the digital asset has broken above a key technical resistance level to climb 4% past the $1.13 mark, according to data available on CryptoQuant at press time.
What the divergence between prices and funding rates suggests is that traders are becoming less aggressive with leveraged long positions as XRP continues to advance, with a 64% surge in 24-hour trading volume just one day after XRP Ledger (XRPL) activity collapses to its lowest level in 2026.
In other words, lower funding rates suggest that leverage is normalizing, which could potentially create room for further price gains if spot demand can keep up. The breakout has thus shifted short-term momentum more in favor of bulls, with traders now eyeing the $1.24-$1.28 region as the next major resistance zone.
However, if XRP price suffers while the funding rates continue falling into negative territory, we could see a shift in market sentiment, with traders increasingly betting on downside momentum.
Is XRP expected to reach record high prices after breakout?
As mentioned, XRP is rallying again, driven by gains in the broader cryptocurrency market. Notably, the total crypto market capitalization has risen nearly 3%, while Bitcoin (BTC) advanced about 3.5%, propping altcoins up in the process.
Beyond the charts, market participants are also monitoring the upcoming deadline for the CLARITY Act, which could influence regulatory sentiment toward digital assets in the coming weeks.
Looking ahead, traders are watching whether XRP can maintain support above the current price of $1.13, as a sustained move above that could lead to further, potentially substantial gains. Conversely, another break below $1.1 would invalidate the short-term bullish breakout.
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