XRP Flashes Rare Signal as Leverage Crashes to New Lows

XRP has remained under pressure in recent weeks, and new on-chain data suggests traders in the derivatives market have become more cautious amid declining leverage. 

As the token’s price continues to struggle, derivatives data shows that both leverage and Open Interest (OI) have dropped to their lowest levels in months.

This is according to a recent market exposition from CryptoQuant analyst CryptoOnChain. He pointed out that XRP closed at $1.075 on Aug. 3, still below the $1.10 mark. The token now sits close to the lower end of its recent price range. 

XRP Leverage Continues to Decline

CryptoOnChain found that XRP’s Open Interest has dropped to between 362 million and 369 million over the past few days. These are the lowest readings seen during the last six months, a period in which Open Interest ranged from 362 million to 519 million, with an average of 435 million.

The analyst also noted that leverage has fallen to a range of 0.139 to 0.142. This places it close to its six-month low of 0.133. 

Compared with their 90-day averages, both Open Interest and leverage have declined by around 12% to 18%. The data suggests traders have gradually reduced their exposure over time.

Liquidation and Funding Rate Data Tell a Different Story

Meanwhile, CryptoOnChain also highlighted market activity during XRP’s decline from $1.143 to $1.061. The liquidation data showed a fairly even balance between long and short positions instead of the one-sided wipeout that usually comes with a forced deleveraging event. 

On July 27, long liquidations reached $3.24 million, while short liquidations totaled $470,000. By July 29, the situation had reversed, with $640,000 in long liquidations compared with $548,000 in short liquidations.

According to the analyst, this balanced pattern is different from a typical deleveraging event, where one side of the market suffers much larger losses than the other. 

Funding rates also support this view. Throughout the period, funding stayed within a narrow range of -0.009 to +0.010. Even though week-over-week funding changes rose by more than 1,000%, the actual funding levels remained close to neutral.

XRP NVT Crash

The analyst also pointed to XRP’s Network Value to Transactions (NVT) ratio, which has dropped 42.7% below its three-month average. 

During the same period, the network’s transaction count fell by only 23.3%. This suggests that XRP’s market value has fallen much faster than activity on the network. 

On the spot market, Binance deposit addresses remain more than 95% below the quarterly average. Even so, a $2.3 million inflow spike on July 30 shows that liquidity has become thinner, not that it has disappeared.

Considering all these indicators, CryptoOnChain believes the market is going through a quiet reset instead of a major breakdown. 

With leverage and Open Interest sitting near multi-month lows, liquidations remaining balanced, and funding rates staying neutral, traders appear to be reducing risk in an orderly way. 

The analyst added that similar periods in the past have often been followed by either price stabilization or a continuation of the existing trend. The next move will likely depend on whether Open Interest begins to level off or keeps falling along with XRP’s price.

XRP Approaches Key Support

Meanwhile, in the short term, XRP continues to trade under pressure. The token currently changes hands at $1.06, marking a 1.98% decline over the past week. 

Its weekly Relative Strength Index (RSI) stands at 33.2, putting it below the neutral level but still slightly above the oversold mark of 30. This shows that sellers remain in control, although bearish momentum has not yet reached its limit.

Technically, $1.05 remains the key support level to watch. If XRP stays below that level, the price could move toward the important $1.00 psychological support. On the upside, buyers need to push the token back above $1.10 before the short-term outlook can begin to improve.