Key takeaways:
XRP derivatives are primarily controlled by bears as the funding rate plunges into negative territory and open interest remains unchanged.
Declining XRP ETF volumes and reduced XRP Ledger TVL reflect waning interest in the XRP ecosystem, diminishing the likelihood of a quick price recovery.
XRP (XRP) dropped 9% in two days following a rejection at $2.18 on Tuesday. The fall below $2 caused temporary chaos in derivatives markets, pushing the cost of holding leveraged bearish positions to a two-month peak. Traders are concerned that XRP may continue to weaken due to the slowdown in exchange-traded fund (ETF) activity and the drop in XRP Ledger deposits.
The funding rate for XRP perpetual futures dropped to -20% on Thursday, marking the lowest level since the crash on Oct. 10. Negative values indicate that sellers (shorts) are paying buyers (longs) to maintain open positions, showcasing a near-complete absence of demand from bullish traders. In more stable conditions, the rate generally fluctuates between 6% and 12% to cover capital costs, which longs typically pay.
Such severely negative funding rates are uncommon and usually brief. A few analysts consider them potential reversal indicators, though most past instances arise during flash crashes rather than prolonged corrective periods. Additionally, declining interest in leverage has led some to speculate whether traders have simply backed away from XRP.
As of Thursday, the aggregate open interest in XRP futures remained at $2.8 billion, unchanged from the previous week. However, leveraged positions have yet to recover to the $3.2 billion level seen in late November. The data indicate that XRP bears are hesitant to increase their exposure, particularly after the token has already plummeted 45% from the $3.66 mark in July.
Declining XRP ETF activity and fading TVL on XRP Ledger
The subdued appetite for bullish XRP positions can be linked to waning activity in US-listed XRP ETFs. Traders entered November with high expectations, but flows and trading volumes fell sharply after just three weeks, leaving assets under management stagnant at around $3.1 billion, per CoinShares data. In contrast, Solana ETFs manage $3.3 billion in assets.
Daily volumes for US-listed XRP ETFs seldom exceed $30 million, dampening interest from institutional desks significantly. Additionally, declining demand for the XRP Ledger frustrates holders. Even the Ripple-backed stablecoin Ripple USD (RLUSD) primarily utilizes the Ethereum network rather than XRP’s infrastructure.
More than $1 billion of RLUSD has been issued on Ethereum, compared to just $235 million on the XRP Ledger. Alarmingly, TVL on the XRP Ledger has hit its lowest point of 2025 at $68 million, indicating diminishing engagement with the chain’s decentralized applications (DApps). By contrast, the Stellar blockchain holds $176 million in TVL, even though XLM’s market capitalization is 93% smaller than XRP’s $121.8 billion.
Related: XRP price may grow ‘from $2 to $10’ in less than a year–Analyst
XRP remains under pressure as competing blockchains like BNB Chain and Solana continue to solidify their presence in the DApps landscape. The limited activity on the XRP Ledger fosters a self-reinforcing cycle where investors are less incentivized to hold XRP, especially compared to the native staking yields available on BNB and SOL.
Currently, there’s no clear indication that any increase in XRP Ledger activity would yield direct advantages for XRP holders.
XRP derivatives indicate growing confidence among bears, while on-chain metrics and ETF flows reveal declining interest, particularly from institutional investors. Consequently, the likelihood of sustained bullish momentum for XRP appears low in the short term.
This article is for general information purposes and is not intended to be and should not be taken as, legal, tax, investment, financial, or other advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
