3 Reasons Why Trader Demand for XRP Has Decreased: Is $1 on the Horizon?

XRP is currently experiencing renewed downward pressure, as both derivatives activities and on-chain positioning have weakened throughout December. These indicators suggest that the market remains in a risk-averse state, even as XRP’s price hovers near significant technical support at around $2.00.

Key Takeaways:

XRP futures taker buy volume on Binance has plummeted by 95.7% since July, signaling a drop in demand.
The Estimated Leverage Ratio (ELR) for XRP has decreased to 0.18, highlighting widespread deleveraging and a reduction in speculative risk.
Retail, mid-sized, and large wallets all demonstrate negative cumulative volume delta for December, confirming a general trend of selling pressure.

Cryptocurrencies, XRP, Markets, Derivatives, Financial Derivatives, Price Analysis, Futures, Market Analysis, Altcoin Watch, Whale
XRP one-day chart. Source: Cointelegraph/TradingView

3 reasons why trader demand for XRP evaporated: Is $1 next?

Decline in XRP Futures Demand Signals Liquidity Issues

Insights from CryptoQuant reveal that XRP's futures taker buy volume on Binance peaked above $5.8 billion in July but has since dropped to approximately $250 million, marking a nearly 96% decline. This significant drop reflects a drastic reduction in buying interest, affecting not only XRP but also the wider altcoin market.

Cryptocurrencies, XRP, Markets, Derivatives, Financial Derivatives, Price Analysis, Futures, Market Analysis, Altcoin Watch, Whale
XRP ledger taker buys volume on Binance. Source: CryptoQuant

Throughout this period, the taker buy-sell ratio has remained negative, indicating that sellers have dominated the XRP derivatives market. With liquidations on the rise and market confidence still fragile following the events of October 10, the ongoing lack of consistent buy-side activity suggests that the risks for further declines remain high. Even optimism surrounding ETFs has not significantly boosted demand.

XRP Leverage Positions Reset Amid Moderate Market Conditions

Recent data from Binance shows that XRP’s Estimated Leverage Ratio has fallen to around 0.18, one of the lowest figures seen in this current cycle, which coincides with a decline in price from above $3.00 to the $2.00 range. This trend indicates that traders have been actively reducing or unwinding leveraged positions due to the ongoing market downturn.

Cryptocurrencies, XRP, Markets, Derivatives, Financial Derivatives, Price Analysis, Futures, Market Analysis, Altcoin Watch, Whale
XRP ledger estimated leverage ratio. Source: CryptoQuant

While lower leverage can mitigate the risk of cascade liquidations, it also signals a decline in speculative interest among traders. Such conditions often represent transitional phases where markets stabilize before forming a clearer directional trend.

Related: Most crypto sectors lagged Bitcoin over past three months: Glassnode

Profit-Taking and Wallet Activity Highlight Market Weakness

According to Glassnode senior researcher CryptoVizArt, on December 11, a wallet holding XRP for 5 to 7 years with an initial cost basis of $0.40 realized over $721.5 million in profits, marking a significant distribution event as prices weakened around the $2.00 level.

Data from Hyblock Capital provides further bearish context, revealing XRP's cumulative volume delta for December is negative across various wallet categories: retail wallets ($0–$10,000) show a decline of -$8.68 million, mid-sized wallets ($10,000–$100,000) at -$6.89 million, and large wallets ($100,000–$10 million) at -$34 million. This data reflects a consistent pattern of net selling, with no group showing sustained buying pressure.

Cryptocurrencies, XRP, Markets, Derivatives, Financial Derivatives, Price Analysis, Futures, Market Analysis, Altcoin Watch, Whale
XRP four-hour chart volume delta cumulative. Source: Hyblock Capital

Overall, XRP appears to be in a low-demand and low-leverage environment, indicating that the asset may either consolidate or face further declines unless liquidity conditions improve significantly.

Related: Ripple pilots RLUSD on Ethereum L2s in multichain push