XRP experienced a notable surge in its derivatives market on Wednesday, December 10, with XRP funding rates soaring more than 360%, as indicated by data retrieved by Finbold from CryptoQuant.
In particular, the data implies that leveraged traders rapidly increased their bullish exposure. For instance, such a positive funding rate means that the futures price is trading at a significant premium to the spot price, as traders betting on XRP’s price to go up are more eager to maintain their long positions by paying high fees to those of the opposite conviction.
Simultaneously, a 3.18% increase in XRP open interest suggests that the staggering figure was not the result of a mere adjustment of existing positions but a hint of fresh capital making its way into the market. In other words, more contracts are being opened, which means a growing number of participants and larger amounts of money in leveraged trades.
XRP funding rates spike, but risk still remains
As such, the simultaneous uptick in funding rates and open interest could signal strong short-term bullish momentum, albeit with a critical risk. Namely, the setup can also be interpreted as a step toward a more overheated trading environment.
When the funding rate is this high, the potential for an XRP long squeeze also increases dramatically. That is, if the token’s price experiences a sudden dip, the leveraged long positions could be quickly liquidated. This forced selling by margin calls would create a cascading effect, driving the price down rapidly and obliterating crowded leveraged longs.
Indeed, the cryptocurrency appears somewhat vulnerable to potential price swings, trading at $2.06 at press time, up 0.36% on the daily chart after having lost most of the gains from the 6% rally the day prior.
Likewise, the value of XRP held on exchanges has fallen sharply, dropping from $7.03 billion on November 10, 2025, to $5.70 billion on December 10, a decline of 18.8%. Historically, such decreases have coincided with XRP price fluctuations and suggest traders are exhibiting more cautious market behavior, profit-taking, or reduced speculative activity.
Therefore, while the situation with rising funding rates and open interest might appear bullish, it represents a dose of extra volatility risk for the cryptocurrency that is already looking at a potential correction.
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