Market Overview for XRP
Key Takeaways:
- Bears currently dominate the XRP derivatives market as funding rates have dipped sharply into negative territory, with open interest remaining stagnant.
- A decline in both XRP ETF volume and the total value locked (TVL) on the XRP Ledger suggests decreasing interest in the XRP ecosystem, dampening short-term price rebound prospects.
XRP suffered a 9% drop over two days after hitting a ceiling at $2.18 on Tuesday. As the price plummeted below $2, the costs associated with holding leveraged bearish positions surged to a two-month high. This triggered concern among traders regarding a potential further decline in XRP value, particularly with the slowdown in ETF activities and a drop in deposits on the XRP Ledger.
On Thursday, the funding rate for XRP perpetual futures hit -20%, marking its lowest level since the crash on October 10. Such negative rates imply that sellers are compensating buyers for maintaining their positions, reflecting a significant lack of demand from bullish traders. Typically, interest rates oscillate between 6% and 12% in a balanced market as longs cover their costs.
Notably low funding rates are often transient. While some analysts view these as reversal signals, historical occurrences have mainly aligned with flash crashes rather than prolonged downturns. There’s also speculation that traders may have stepped back from XRP due to reduced appetite for leverage.
Currently, the total open interest in XRP futures remains at $2.8 billion, unchanged from the previous week. However, leveraged positions have yet to bounce back to the $3.2 billion seen in late November. This data suggests that XRP bears are hesitant to amplify their positions after a staggering 45% decline from July’s peak of $3.66.
Decline in XRP ETF Activity and TVL
The waning enthusiasm for bullish XRP positions likely connects to lower activity in XRP ETFs listed in the U.S. As November commenced with high expectations, inflows and trading volumes have sharply dropped, resulting in assets under management nearly reaching $3.1 billion, per CoinShares. In contrast, the Solana ETF boasts $3.3 billion in assets.
Moreover, daily trading volumes for U.S.-listed XRP ETFs rarely surpass $30 million, suggesting declining interest among institutional investors. The continued downturn in demand for the XRP ledger adds frustration for holders. Interestingly, Ripple’s stablecoin, RLUSD, primarily utilizes the Ethereum network instead of relying on XRP’s infrastructure.
Over $1 billion worth of RLUSD has been issued on Ethereum, compared to just $235 million on the XRP Ledger. Alarmingly, the XRP Ledger’s TVL has plunged to a 2025 low of $68 million, underscoring a reduction in the chain’s engagement with decentralized applications (DApps). By comparison, the Stellar blockchain manages $176 million in TVL, even though its market cap is significantly smaller than XRP’s $121.8 billion.
XRP is currently facing pressure as rival blockchains like BNB Chain and Solana strengthen their foothold within the DApps ecosystem. The sparse activity on the XRP Ledger has created a cycle of consolidation that disincentivizes investors from holding XRP, particularly when evaluating the staking yields available on BNB and SOL.
There remains no definitive evidence that increased activity on the XRP Ledger directly benefits XRP holders. While there’s evident confidence among bears in the derivatives market, on-chain indicators and ETF flows highlight a dwindling interest, especially from institutional players. This trend suggests that XRP’s bullish momentum may struggle to persist in the near future.
