Key Takeaways:
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XRP derivatives are dominated by bears because the funding rate turned sharply negative and open interest stays stagnant.
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XRP ETF volumes and declining XRP Ledger TVL show waning interest within the XRP ecosystem, reducing the probabilities of a short-term price recovery.
XRP (XRP) fell 9% in two days after being rejected at $2.18 on Tuesday. The dip below $2 caused temporary turmoil in derivatives markets as the price of holding leveraged bearish positions rose to a two-month high. Traders fear that XRP could weaken further given the slowdown in exchange-traded fund (ETF) activity and the decline in XRP Ledger deposits.
Annualized funding rate for XRP perpetual futures. Source: laevitas.ch
The XRP perpetual futures funding rate fell to -20% on Thursday, its lowest level for the reason that Oct. 10 crash. Negative values indicate that sellers (shorts) are paying buyers (longs) to take care of open positions, indicating an almost complete lack of demand from bullish traders. Under more balanced conditions, the rate of interest is usually between 6% and 12% to account for the price of capital, with long positions covering this fee.
Such strongly negative financing rates of interest are rare and typically only short-lived. Some analysts even view them as potential reversal signals, although most historical examples occurred during flash crashes fairly than prolonged correction phases. Additionally, the declining appetite for leverage has led some to query whether traders have simply retreated from XRP.
Aggregate open interest in XRP futures was $2.8 billion on Thursday, unchanged from the previous week. Nevertheless, leveraged positions haven’t returned to the extent of $3.2 billion reached at the tip of November. The data suggests that XRP bears are hesitant to extend their commitment, especially after the token has already fallen 45% since reaching $3.66 in July.
Declining XRP ETF activity and dwindling TVL on the XRP Ledger
Part of the dampened appetite for bullish XRP positions could also be related to the bearish activity of US-listed XRP ETFs. Traders entered November with strong expectations, but inflows and trading activity fell sharply after just three weeks, leaving assets under management at nearly $3.1 billion, in accordance with CoinShares data. For comparison, Solana ETFs hold $3.3 billion in assets.
The every day volume of US-listed XRP ETFs rarely exceeds $30 million, significantly dampening interest from institutional investors. Declining demand for the XRP Ledger is one other source of frustration for holders. Even Ripple-backed stablecoin Ripple USD (RLUSD) relies totally on the Ethereum network fairly than XRP's infrastructure.
More than $1 billion value of RLUSD has been issued on Ethereum, in comparison with just $235 million on the XRP ledger. Even more worrying, the TVL on the XRP ledger has fallen to its lowest level in 2025 at $68 million, indicating declining interaction with the chain's decentralized applications (DApps). In contrast, the Stellar blockchain holds $176 million in TVL, although XLM's market cap is 93% smaller than XRP's $121.8 billion.
XRP stays under pressure as rival blockchains reminiscent of BNB Chain and Solana proceed to strengthen their positions within the DApps ecosystem. The limited activity on XRP Ledger creates a reinforcing cycle where investors have less incentive to carry XRP, especially in comparison with the native staking returns available on BNB and SOL.
So far, there isn’t any clear evidence that a rise in XRP ledger activity would bring direct advantages to XRP holders.
XRP derivatives indicate increased confidence amongst bears, while on-chain metrics and ETF flows show waning interest, particularly amongst institutional investors. Therefore, the probabilities of sustained bullish momentum for XRP appear slim within the near term.
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