The XRP futures market is undergoing a violent de-leveraging event. Long position liquidations surged 832% over the past month, approaching $3 million in total value. Open interest contracted 11.1%, sliding from $1.18 billion to $1.04 billion. More strikingly, funding rates flipped negative by a staggering 463% relative to the quarterly baseline, signaling a severe pullback in traders' risk appetite.
The liquidation wave has almost exclusively hit long positions, while short liquidations remained negligible. Analysts describe this as a forced market clean-up of leveraged bullish bets, with overextended positions being squeezed out to reset risk pricing.
Spot market stays calm, but divergence signals caution
In sharp contrast to the futures turmoil, the XRP spot market has remained relatively stable. XRP reserves on Binance declined just 0.35% week-over-week, indicating no panic-driven inflows or withdrawals. Spot holders are not rushing to exit, keeping immediate sell-side pressure contained.
Such divergence between futures and spot often marks a transitional phase. If spot holdings continue to hold firm and futures sentiment bottoms out, it could pave the way for a recovery. But if spot liquidity begins to crack, downside risks will intensify.
Technical signals show potential reversal: TD Sequential and Morning Star Doji
On the technical side, analyst Ali Charts has flagged two possible reversal signals on XRP's daily chart. The Tom DeMark Sequential indicator flashed a "9" buy signal, often interpreted as trend exhaustion. Additionally, a Morning Star Doji candlestick pattern has formed over the past three sessions, a classic sign of a potential short-term bottom after a downtrend.
Ali Charts suggests that if buy volume picks up, XRP could target the $1.30 region from its current level near $1.05. However, he cautions that these signals alone are not enough to confirm a lasting trend shift. For the market to regain bullish momentum, open interest must recover and funding rates need to normalize.
Fundamentals: Ripple launches RLUSD in Japan, expanding XRP use cases
On the fundamentals front, Ripple's launch of RLUSD through Japan's SBI VC Trust has drawn attention. Ripple, known for its cross-border payments and digital asset infrastructure, is building its stablecoin platform under regulatory compliance and with reputable partners. Analysts believe this new ecosystem could eventually expand XRP's utility over time.
Short-term focus now lies on whether fresh demand will return. If open interest begins to recover and funding turns positive, XRP could find a steadier footing after the recent selloff. If not, persistently negative funding and short-dominated positioning may drive further volatility.