Key Highlights

• XRP derivatives show significant bearish trends with funding rates dropping to deep negatives, while open interest stays level.
• The interest in XRP, indicated by ETF volumes and a reduction in the XRP Ledger’s total value locked (TVL), is waning, dampening the possibility of an immediate price surge.

On Tuesday, XRP (XRP price) fell 9% over a period of two days after facing rejection near the $2.18 mark. This decline steered XRP below $2, creating chaos in derivatives markets as the expense associated with maintaining leveraged bearish positions surged to a two-month peak. Concerns loom among traders that XRP’s potential for further weakening is increasing, especially in light of dwindling exchange-traded fund (ETF) activity and the drop in XRP Ledger deposits.

XRP perpetual futures annualized funding rate. Source: laevitas.ch

The funding rate for XRP perpetual futures plummeted to -20% on Thursday, marking a record low since the crash on October 10. Such negative readings indicate that sellers (shorts) must pay buyers (longs) to uphold their open positions, highlighting a near-absence of demand from bullish traders. Typically, this rate ranges between 6% to 12% under balanced conditions to accommodate capital costs, which longs usually cover.

Deeply negative funding rates are uncommon and generally brief, with some analysts perceiving them as potential reversal indicators, though many historical instances have occurred during sharp crashes rather than prolonged correction phases. Moreover, the declining demand for leverage provokes questions about whether traders have simply taken a step back from XRP.

XRP futures aggregate open interest, USD. Source: CoinGlass

As of Thursday, the total open interest in XRP futures remained steady at $2.8 billion, unchanged from the previous week. However, leveraged positions have yet to recover the $3.2 billion level observed in late November. This data suggests that XRP bears are hesitant to amplify their exposure, particularly after a 45% drop since the token reached $3.66 in July.

Dwindling XRP ETF Activity and TVL on XRP Ledger

A significant factor contributing to the cautiousness toward bullish XRP positions is the declining activity in US-listed XRP ETFs. Despite entering November with strong expectations, inflows and trading activities plummeted sharply after just three weeks, leaving the assets under management stagnant near $3.1 billion, as per CoinShares data. Compared to this, Solana ETFs command $3.3 billion in assets.

US-listed XRP ETF daily volumes on Thursday, USD. Source: CoinGlass

The daily volume for US-listed XRP ETFs rarely breaks $30 million, suppressing institutional interest. Additionally, diminishing demand for the XRP Ledger has led to frustration among holders. Even Ripple-backed Ripple USD (RLUSD) predominantly operates on the Ethereum network rather than XRP’s infrastructure.

Ripple USD (RUSD) in circulation per blockchain. Source: DefiLlama

Over $1 billion in RLUSD has been minted on Ethereum, compared to a mere $235 million on the XRP Ledger. Alarmingly, the TVL on the XRP Ledger has dipped to its 2025 low of $68 million, indicating a decline in user interaction with decentralized applications (DApps) on the chain. In contrast, the Stellar blockchain boasts a TVL of $176 million, even though XLM’s market cap stands at just 93% lower than XRP’s $121.8 billion.

XRP faces ongoing pressure as competitive blockchains like BNB Chain and Solana continue to fortify their positions within the DApps ecosystem. The lack of activity on the XRP Ledger fosters a cycle discouraging investors from holding XRP, especially when juxtaposed with the native staking yields available on BNB and SOL.

Currently, there is no clear evidence indicating that an increase in XRP Ledger activity would directly benefit XRP holders. XRP derivatives suggest rising confidence among bears, while on-chain metrics and ETF flows show waning interest, chiefly from institutional investors. Consequently, the likelihood of sustained bullish momentum for XRP appears minimal in the near future.

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