XRP Experiences Sharp 59% Leverage Drop as Speculators Pull Back

XRP's derivatives market is undergoing significant changes, marked by a decline in leverage and a return to normal funding rates, indicating a clear retreat from aggressive speculation. Recent findings from Glassnode on November 30 highlight this phase as a structural shift rather than a temporary one.

Key Takeaways

XRP's leverage in the derivatives market has dropped significantly, with a 59% decline in open interest from 1.7 billion XRP to 0.7 billion XRP.
The funding rate for XRP has also fallen to near neutrality, indicating decreased speculative interest.
Recent market behavior shows heavy profit-taking during price declines and a large percentage of XRP holders are now facing losses.
The current market is characterized by significant deleveraging and a cautious stance from speculators, with XRP trading at $2.04.

XRP News

The Unraveling of XRP Derivatives

XRP's futures open interest (OI) has seen a drastic drop from 1.7 billion XRP in early October to 0.7 billion XRP, representing a 59% reduction. Coupled with a funding rate decline from approximately 0.01% to 0.001%, the data indicates that October 10 marked a significant pause in speculative interest for XRP. As Glassnode's CryptoVizArt detailed on X, this shift reflects a wholesale reduction in risk exposure by speculative traders.

XRP Futures Open Interest

Open interest figures of 1.7 billion XRP illustrated a market heavily reliant on leverage, with significant futures and perpetual positions in place. The drop to 0.7 billion XRP suggests that around one billion XRP in derivatives exposure has either been closed or liquidated, indicating a substantial unwinding of speculative positions. This is not merely a minor risk adjustment; it represents a significant deleveraging action, removing much of the speculative excess that was previously inflating the spot market.

Similarly, the shift in funding rates is important. The previous 7-day Simple Moving Average (SMA) of 0.01% suggested a strong long bias, with traders willing to incur fees to maintain leveraged positions. The drop to about 0.001% indicates a move toward neutrality, which typically occurs when interest in leveraged long positions diminishes and the market no longer supports higher premiums for holding these positions.

XRP Futures Funding Rate

Glassnode’s characterization of the October 10 decline as marking "a structural pause" captures the significant market regime change: from a scenario characterized by overwhelming long positions to a more cautious and balanced approach.

Glassnode's analysis from late November sheds light on broader market behaviors, noting significant profit-taking during XRP’s recent price pullback. On November 8, the firm reported that profit realization volumes surged, deviating from typical trends seen during rallies. As XRP's price fell from $3.09 (approximately 25%) to $2.30, the amount of profits realized exploded from $65 million to $220 million per day—indicating that traders were cashing out as prices dropped, a clear signal of deleveraging.

On November 17, further insights into supply dynamics revealed that the portion of XRP supply in profit had fallen to 58.5%, the lowest level since November 2024. Despite XRP trading around four times higher ($2.15), a significant 41.5% of the supply (approximately 26.5 billion XRP) is now in loss, highlighting a market that is top-heavy and fragile, mainly held by late investors. These on-chain metrics contextualize the derivative market's status as of November 30: a significant portion of XRP ownership is held by late entrants facing considerable unrealized losses, while leverage has been largely purged from the system.

In conclusion, Glassnode’s data on futures open interest and funding rates encapsulate the current condition of XRP: a substantial 59% reduction in leverage, a near-neutral funding environment, and a cautious speculative group refraining from pursuing leveraged upside—all atop a market structure weighted down by late entrants.

At the time of writing, XRP is trading at $2.04.

XRP price