XRP is experiencing significant derisk as leverage, open interest, and price momentum weaken, increasing the likelihood of large swings in both directions in the near future.
New data from CryptoQuant and CoinGlass shows deep leverage removal coinciding with a slide below $2.00. Weak technical structure and thin liquidation increase the risk of sudden volatility.
- ELR XRP on Binance fell from ~0.58 to ~0.20, reflecting leverage washout.
- Open interest futures fell from their peak above $10 billion, and speculative momentum cooled.
- Price around $1.90, RSI ~35; risk of further decline or unexpected volatility.
XRP leverage is being severely eroded.
ELR XRP on Binance fell from nearly 0.58 to around 0.20, indicating position closing and/or force-liquidation, weakening the influence of borrowed Capital on price volatility.
CryptoQuant notes this as one of the strongest monthly leverage contractions of 2025. A decrease in ELR typically means fewer new borrowing orders, margin closures, or liquidation chain to clean up leverage, thereby reducing the amplification of Derivative to the spot price.
In the context of Derivative risk management, BingX provides a suite of tools to monitor open interest (OI), funding, and liquidation, helping to assess when leverage stabilizes and when the market repositions risk.
History shows that when ELR runs out, XRP usually: (1) leans towards a slow decline due to spot selling dominance, or (2) experiences a sharp swing as sideways money flows back in. Currently, the data leans towards scenario (1), but the situation could reverse quickly.
XRP open interest plummets, weakening speculative momentum.
XRP open interest futures have fallen sharply from their peak of over $10 billion earlier this year, reflecting a withdrawal of speculative capital and a cooling of the Derivative market.
CoinGlass shows that Open Interest (OI) decreases in sync with ELR, signaling a significant cooling down in two key Derivative variables. When OI declines, the Order Book depth is typically thinner, increasing the likelihood of slippage and volatility spikes when large orders are placed.
Synchronized declines (ELR + OI) typically occur against a backdrop of macroeconomic uncertainty or thin system liquidation . XRP is experiencing both of these factors, making its price reaction sensitive to news and large order flows.
XRP price structure is weakening, RSI is approaching oversold.
The price retreated to around $1.9, with the trend continuing with progressively lower peaks and Dip ; the RSI is around 35, leaning towards the selling side but not yet reaching the capitulation zone.
On the daily chart, the bearish structure persists as all rallies fail at the near-term resistance zone. The lack of bullish divergence on the RSI suggests that selling momentum has not yet exhausted. Narrow-range candles accompanied by thin liquidation are often a precursor to extended volatility.
Until a reliable reversal candlestick or a large-volume shakeout appears, the risk of a bearish "grind" remains. (Technical reference: TradingView)
The signal needs to be monitored to determine the next course of action.
Prioritize three signals: Open Interest (OI) returning to a sustained upward trend, ELR stabilizing or slightly increasing, and a higher Dip on the daily timeframe. Without these, the risk of a sudden decline/volatility remains high.
- Open interest (OI) increased accompanied by improved liquidation : confirming the return of speculative capital flows, enhancing the resilience of the Order Book against market fluctuations.
- ELR moving sideways/slightly upward: indicates that leverage washing is complete, and the market is ready for a new directional move.
- Higher Dip : an early signal of structural reversal, increasing the probability of forming a sustained uptrend.
Conclusion: The Derisk trend lays the groundwork for the next price movement.
The plunge in ELR and OI indicates that traders are leaving the market, leaving it vulnerable to liquidation shocks. When activity resumes, volatility can expand rapidly in both directions.
- Unless there is a structural reversal or a recovery in Derivative demand, the probability of XRP remaining trapped in a downtrend is significant.
- Risk management around areas of low liquidation and key technical levels is crucial until confirmation signals emerge.
Frequently Asked Questions
What does a decrease in ELR (Estimated Leverage Ratio) mean for XRP?
A decrease in ELR indicates that leveraged positions are being closed or liquidated, reducing the influence of borrowed Capital on price fluctuations. This is often a "leverage wash" phase, where the market cools down but remains volatile as money flows back in. (Source: CryptoQuant)
Why is a decrease in open interest important for trending?
Decreased open interest (OI) reflects the withdrawal of speculative capital, thinner market depth, and increased sensitivity to large orders. Combined with a decrease in open interest (ELR), the probability of sudden price swings is higher, especially when news or order blocks trigger chain liquidations. (Source: CoinGlass)
When will the XRP price structure show signs of improvement?
When Open Interest (OI) increases sustainably, ELR stabilizes or increases and forms a higher Dip on the daily timeframe. The appearance of a confirmation candle with superior volume will reinforce the probability of a sustained reversal. (Technical reference: TradingView)
