XRP Update

1. XRP’s derivatives market just experienced one of its sharpest resets in recent memory, with futures open interest collapsing by roughly 59% according to Glassnode data. The drop from around 1.7 billion XRP in early October to nearly 0.7 billion XRP signals a mass exit from leveraged speculation. Such a dramatic contraction is rarely random — it typically reflects either forced liquidations, aggressive de-risking, or both.

2. This unwind didn’t happen in isolation; it coincided with a steep decline in funding rates across major exchanges. XRP’s 7-day average funding rate slid from ~0.01% to only 0.001%, essentially flatlining. When funding shrinks this dramatically, it often means bullish traders have backed off, no longer willing to pay a premium to hold long positions.

3. The collapse in funding also reveals a psychological shift among traders: bullish confidence has thinned out substantially. For weeks, long-side traders dominated the market, but the sudden silence in funding rates suggests that momentum chasers have left the arena, leaving derivatives activity at one of its calmest points in months.

4. Spot market metrics tell an equally important story. The percentage of XRP supply in profit has fallen to just 58.5% — the lowest since November 2024. This marks a significant change in market composition, as nearly half of all holders now sit on unrealized losses despite XRP trading multiple times higher than its 2024 lows.

5. This means roughly 26.5 billion XRP are now “underwater,” creating a dense cluster of price memory above current levels. When a large percentage of holders bought near recent highs, the market becomes vulnerable to psychological pressure: every small rally may tempt trapped holders to exit at breakeven.

6. This underwater concentration also creates what analysts call a “top-heavy” structure — a market dominated by late entrants rather than long-term accumulators. Such structures tend to behave with less stability because they rely heavily on positive sentiment to prevent cascading sell-offs.

7. The combination of washed-out leverage, weakening funding, and underwater supply sets the stage for consolidation or even a broader corrective phase. Price doesn’t necessarily need to crash — but unless sentiment improves, XRP may struggle to reclaim higher levels in the near term.

8. If new catalysts emerge — such as legal clarity, strong inflows into altcoins, or positive macro trends — the reset in leverage could actually be beneficial. Markets that flush out excess speculation sometimes regain healthier, more sustainable uptrends once the “froth” is removed.

9. However, without such catalysts, XRP is vulnerable to renewed volatility. If price dips further, underwater holders could begin capitulating, adding selling pressure that deepens the correction. Traders should prepare for the possibility of range-bound movement as the market rebuilds its structure.

10. For now, the data paints a cautious picture: XRP is entering a phase where sentiment, liquidity, and macro conditions will drive direction more than technical momentum. Traders and holders should remain vigilant, manage risk conservatively, and avoid assuming that the recent wipeout automatically guarantees a quick recovery.