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    Home»Altcoins»XRP’s Unattractive Funding Rate Doesn’t Attract Bullish Investors: What’s Behind It?
    Altcoins

    XRP’s Unattractive Funding Rate Doesn’t Attract Bullish Investors: What’s Behind It?

    Ethan CarterBy Ethan CarterDecember 11, 2025No Comments4 Mins Read
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    XRP's Unattractive Funding Rate Doesn't Attract Bullish Investors: What's Behind It?
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    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.

    019b0f15 fab4 77ff 92bd 8e0bb6e82bb3
    XRP perpetual futures annualized funding rate. Source: laevitas.ch

    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.

    019b0f15 fdde 71f0 bebf d7d7a656d7e2
    XRP futures aggregate open interest, USD. Source: CoinGlass

    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.

    019b0f16 0125 7afd 856e e81161e5a1a9
    US-listed XRP ETF daily volumes on Thursday, USD. Source: CoinGlass

    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.

    019b0f16 0597 7409 afb0 f4ce3ab361bd
    Ripple USD (RUSD) in circulation per blockchain. Source: DefiLlama

    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.