Crypto analyst Maartunn is predicting a potential "short squeeze" for XRP based on specific warning signs flashing in the derivatives market.
Why a short squeeze is likely
The middle panel of the chart tracks Aggregated Open Interest (OI). Open interest represents the total number of active, open futures or options contracts that have not yet been settled.
The OI line is climbing sharply, reaching over 943 million. This indicates that a significant amount of new money is entering the XRP derivatives market and traders are opening fresh positions.
The bottom panel displays the aggregated funding rate. In cryptocurrency perpetual futures, funding rates are periodic payments made between traders to keep the contract price aligned with the actual spot price of the asset.
When the rate is positive, traders betting the price will go up (longs) pay the traders betting it will go down (shorts). This means the market is broadly bullish.
When the rate is negative, the shorts have to pay the longs. This happens when the market is heavily skewed bearish, and there is massive demand to short the asset.
The bottom panel is filled with red bars dropping below the zero line (currently at -0.0010). This persistent negative funding rate proves that the vast majority of traders are aggressively shorting XRP.
Because Open Interest is going up while Funding Rates are negative, it means the massive influx of new money entering the market is primarily opening short positions. The market is heavily crowded with traders betting that the price of XRP will fall.
This heavily crowded, bearish setup is exactly why Maartunn is betting on a "short squeeze."
A short squeeze is a rapid, cascading price spike that occurs when an asset is heavily shorted. Here is how it triggers:
If XRP’s price suddenly ticks upward, those short sellers begin to take losses.
To exit a losing short position (or if their leveraged positions are forcibly liquidated by the exchange), the trader must buy back the asset.
This forced, panicked buying pushes the price even higher.
The higher price then liquidates the next level of short sellers, forcing them to buy, creating a domino effect that sends the price skyrocketing.
Dan Burgin
U.Today Editorial Team
Vladislav Sopov
