XRP’s Derivatives Reset Hints at Bullish Reversal, but a Drop to the $1.20 Zone May Come First

Ripple’s XRP continues its downtrend amid lackluster sentiment across the broader crypto market. 

Over the past week, its market capitalization has shed 5%, a slide significant enough for BNB to reclaim its spot as the fourth-largest crypto asset.

As XRP struggles in the spot markets, derivatives traders have continued to quietly unwind their exposure, a trend that now determines the altcoin’s next direction.

Leveraged Traders Are Stepping Back

In a new report, CryptoQuant analyst Amr Taha found that XRP derivatives trading activity on popular exchange Binance is witnessing a drawdown.

Taha assessed XRP’s Estimated Leverage Ratio (ELR) on the exchange and found that it has plunged by 79% since mid-July 2025. 

“Binance’s Estimated Leverage Ratio for XRP has fallen from around 0.59 in mid-July 2025 to 0.13, pointing to a major unwind in leveraged positions,” Taha wrote.

An asset’s ELR measures the average leverage its traders use to complete trades on a cryptocurrency exchange, calculated by dividing open interest by the exchange’s reserve for that currency. 

When it declines, it signals a dwindling risk appetite among derivatives traders. It indicates that investors are becoming more cautious about the token’s near-term outlook and avoiding high-leverage positions that could worsen their losses.

XRP Open Interest Falls

XRP’s Binance open interest is also falling. Per the report, “Binance open interest in XRP has dropped to nearly $375 million, well below the highs recorded in previous months.”

Open interest measures the total number of futures and options contracts yet to be closed. When it drops during periods of poor price performance like this, it means traders are closing out positions rather than opening new ones. 

This is a sign that conviction is fading. It signals that XRP derivatives traders on Binance are unwilling to commit capital until broader market sentiment improves, heightening the risk of a further price drop.

While these readings generally point to a market in decline, Taha opined that “these moves suggest a broader reset in Binance’s XRP derivatives market.” 

According to the analyst, with fewer overleveraged positions in play and subdued open interest, “the market appears less crowded and less exposed to liquidation-driven swings.” 

This reflects a market in wait-and-see mode, as XRP is now less vulnerable to the kind of sudden crashes that have historically worsened its decline during bearish periods.

However, readings on the altcoin’s technical chart suggest caution.

XRP’s Technical Indicators Align to the Downside 

As of this writing, XRP’s Relative Strength Index (RSI) is at 44.38 and trending lower. This reflects a market with falling buy-side pressure. 

The RSI indicator measures whether an asset is being overbought or oversold. When an asset’s RSI rises above 70, it signals that the asset is overbought and a pullback is imminent. 

Conversely, when the RSI falls below 30, it signals that the asset is oversold, increasing the likelihood of a price recovery.

At 44.38 and falling, XRP’s RSI suggests spot buyers are losing their grip on the market, and without a meaningful surge in demand, the token remains at risk of further declines.

Moreover, the setup of the token’s Moving Average Convergence Divergence (MACD) supports this bearish outlook.

For the first time since February 13, the MACD line (blue) has crossed below the signal line (orange). The indicator has also printed a red histogram bar confirming the bearish shift in momentum.

The MACD is a trend and momentum indicator that helps traders identify shifts in market direction through the relationship between its two lines. 

When the MACD line crosses below the signal line, and the histogram turns red, it signals that downward momentum is building and that sellers are beginning to overpower buyers. 

XRP Faces $1.20 Zone Risk, but Derivatives Reset Could Fuel a Push to $1.51

At press time, XRP trades at $1.42, trending towards the lower line of the horizontal channel that has kept its price sideways since early February. 

If spot momentum continues to weaken, XRP risks breaching the support at $1.31. A close below this floor could trigger a dip to $1.11, bringing XRP down under the psychological $1.20 level.

However, the derivatives market reset that Taha identified could tell a different story. As the market grows less crowded and liquidation risk reduces, conditions become more attractive for fresh capital to enter. 

If derivatives traders begin taking positions and open interest picks back up, that renewed appetite tends to spill over into the spot market. When that happens, demand rises, and price usually follows.

Should that dynamic play out, XRP could reclaim and close above $1.42, opening the door for a push toward the $1.51 target.

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About the Author

Abiodun Oladokun

Abiodun Oladokun is a Research Analyst at CCN, where he covers cryptocurrency markets with a focus on on-chain analysis, technical assessments, and emerging trends across decentralized finance (DeFi), real-world assets (RWA), artificial intelligence (AI), decentralized physical infrastructure networks (DePIN), Layer 2s, and meme coins.

Prior to CCN, he served as a Senior On-Chain Analyst at BeInCrypto, producing market reports spanning diverse crypto sectors.

Before that, he conducted technical analysis and market assessments of various altcoins at AMBCrypto, where he also contributed long-form quarterly research papers on DeFi, NFTs, DAOs, and scaling architectures, leveraging on-chain platforms including Messari, Santiment, DefiLlama, and Dune Analytics.

He began his crypto career as a research analyst at SixthSense DAO, developing blockchain forensic tools to trace the history of stolen assets.

Abiodun is a lawyer called to the Nigerian Bar and the founder of Ilé Ijó, a Lagos-based electronic dance music collective.

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