XRP's Derivatives Market Undergoes Dramatic Leverage Reset
The XRP derivatives market has recently experienced a significant structural shift, characterized by a substantial deleveraging event and a normalization of funding rates. This indicates a clear retreat from aggressive speculative positioning, with data pointing to a more cautious market stance rather than mere tactical adjustments.
Open Interest Plunges by 59%
Analysis from Glassnode reveals a precipitous decline in XRP's futures Open Interest (OI), which plummeted from 1.7 billion XRP in early October to just 0.7 billion XRP – a staggering 59% flush-out. This drastic reduction implies that approximately one billion XRP of derivatives exposure has been unwound, whether through closure, liquidation, or other means. This is not a minor adjustment but a wholesale deleveraging that has stripped a significant portion of the speculative layer from the spot market.
Funding Rates Normalize Amid Fading Long Demand
Further reinforcing this shift is the movement in funding rates. The 7-day Simple Moving Average (SMA) of the funding rate, which previously hovered around 0.01%, signaling a consistent long bias and traders willing to pay a premium for leveraged upside, has compressed to roughly 0.001%. This brings the funding rate close to neutral, suggesting a decline in demand for leveraged long positions. In perpetual futures, such a transition typically occurs when the market no longer supports a substantial premium for holding long positions, indicating a fading appetite for aggressive upside bets among speculators.
Structural Weakness and Profit Taking
This market dynamic is further underpinned by broader on-chain data. In November, Glassnode highlighted that the share of XRP supply in profit had fallen to 58.5%, the lowest since November 2024. Despite the price trading significantly higher today ($2.15 compared to $0.53), a substantial 41.5% of the supply (around 26.5 billion XRP) remains in unrealized loss. This top-heavy market structure, dominated by late buyers, suggests a fragile environment where profitable holders have been realizing gains as prices fell, reinforcing the deleveraging trend. Collectively, the data paints a picture of XRP in a new regime: a market that has undergone a violent 59% leverage reset, is operating under a near-neutral funding environment, and sees a speculative cohort largely stepping back from paying for further upside, all built upon a foundation of late-entrant holders now facing considerable unrealized losses. At press time, XRP traded at $2.04.
