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$XRP funding rates on Binance have moved below zero to negative territory as leverage unwinds in the derivatives market.
$XRP’s derivatives market recently saw an important change when the Binance $XRP funding rate fell to -0.002. This marked the first negative reading in 14 trading sessions.
Why the $XRP Funding Change is Critical
Before then, funding had stayed positive for two weeks, moving between +0.001 and +0.010 as traders remained largely bullish after $XRP’s strong August recovery.
For context, $XRP had risen from below $1 earlier in the month to a 3-month high of about $1.69 before facing resistance and pulling back to the current price of $1.41. While the move to -0.002 may look small, it’s worth watching due to the timing.
For the uninitiated, funding rates help keep perpetual futures prices close to the spot market. When funding stays positive, long traders pay short traders, which usually suggests stronger demand for long positions.
When funding turns negative, short traders pay long traders, showing that bearish positioning has gained ground. Nonetheless, negative funding does not always lead to a price decline.
In April 2025, $XRP funding became deeply negative before $XRP climbed from $1.60 to $3.65, an 82% gain, as short positions began to unwind. When too many traders bet on falling prices, even a small increase in buying can force them to close their positions and push the price higher.
$XRP Market Clears Leverage
The change in $XRP funding came after a round of liquidations across $XRP’s derivatives market. During the 48 hours before the recent funding reading, both long and short traders faced heavy losses.
On Sept. 3, $XRP rose 7.4%, forcing the market to close $4.67 million in short positions. The next session brought a reversal, which led to $8.23 million in long liquidations. Overall, the two sessions cleared around $14.2 million from the derivatives market.
The liquidations also caused a drop in open interest. Notably, the $XRP open interest fell from $558 million to $478 million, a 14% decline, as traders reduced their positions. The estimated leverage ratio also fell from 0.203 to 0.182. However, it remains above the six-month average of 0.164, suggesting that some leverage remains in the market.
During the peak of the August rally, the leverage ratio reached 0.213, its highest level in seven months, and open interest rose to $3.45 billion during a 44% price increase. The recent decline shows that traders have reduced risk, although the market has not completely cleared its excess leverage.
Spot Channels Now Quiet
Binance’s spot-market data also shows limited activity around $XRP. Specifically, inflows reached only 510,229 $XRP, equal to 6.6% of the six-month average. Outflows were even lower at 160,247 $XRP, or just 2.1% of the average.
Meanwhile, the number of deposit addresses fell to 36, representing a 91% decline from the quarterly baseline. These figures suggest that far fewer traders are moving $XRP onto Binance, including those who may be preparing to sell.
Binance’s $XRP reserve ended the period almost unchanged at 2.6 billion $XRP. However, 88% of the week’s total inflow came during the Sept. 2 session. This happened on the same day Ripple carried out its regular monthly release of 1 billion $XRP from escrow.
The release contributed to some profit-taking and short-term selling pressure. Once the one-off event is removed, the broader inflow picture looks very quiet.
CryptoQuant data also shows that Binance’s 30-day average $XRP balance fell from about 3.17 billion $XRP in November 2025 to 2.61 billion $XRP on Sept. 1, 2026. This represents a decline of roughly 551 million $XRP, or 17.4%, in less than a year.
The launch of spot $XRP ETFs in November and December 2025 may have played a role, as institutional demand moved $XRP away from exchanges and into ETF custody.
Two Paths from Here
Currently, $XRP trades at around $1.41, already up 2% in September. The latest derivatives indicators now show that traders have reduced their exposure.
These metrics leave $XRP with two possible paths. First, the market could begin forming a base if funding returns to normal levels and $XRP continues to hold support.
However, lower liquidity could also make the market more vulnerable to another decline if Binance reserves start rising alongside renewed deposits.
$XRP is approaching an important test, especially with the September 15 CLARITY Act vote just eight days away. The outcome of the vote could determine whether the current market reset supports a recovery or leads to another pullback.