XRP Hit By Violent 59% Leverage Flush As Speculators Slam The Brakes

Overview

XRP’s derivatives market has experienced a significant shift, marked by a substantial reduction in leverage and a normalization of funding rates. This change indicates a retreat from aggressive speculative positioning among traders, as highlighted by recent insights from Glassnode.

Market Developments

Collapse of Leverage

The derivatives market for XRP has seen a dramatic decline in open interest, dropping from 1.7 billion XRP in early October to 0.7 billion XRP. This represents a 59% decrease in leverage, suggesting that a significant amount of derivatives exposure—approximately one billion XRP—has been closed, liquidated, or unwound. The reduction in open interest indicates a major deleveraging process, removing a considerable amount of speculative risk from the market.

Changes in Funding Rates

The funding rate has also shifted notably, decreasing from approximately 0.01% to about 0.001% on a 7-day simple moving average (SMA). This decline indicates a move toward a near-neutral funding environment, suggesting that traders are less willing to pay to maintain leveraged long positions. Such a transition typically occurs when demand for leveraged longs diminishes, reflecting a more cautious market sentiment.

Structural Shift in Speculation

The date of October 10 has been identified as a critical point, marking a structural pause in the appetite of XRP speculators for aggressive upside bets. This shift in market dynamics has led to a more balanced and cautious stance among traders compared to the previous long crowding.

Profit Realization Trends

Further context is provided by trends in profit realization. Since late September, as XRP’s price declined, the volume of profit realization surged significantly, indicating that profitable holders have been taking gains as the price fell. This behavior contrasts with previous profit-taking patterns that aligned with price rallies.

Supply Dynamics

On November 17, Glassnode noted that the percentage of XRP supply in profit had decreased to 58.5%, the lowest level since November 2024. Despite XRP trading at a much higher price than it was then, a significant portion of the supply is now in loss, indicating a market characterized by late buyers and substantial unrealized losses.

Impact on the crypto market

• A significant reduction in XRP’s leverage could lead to decreased volatility in the market.
• The normalization of funding rates may signal a shift toward more cautious trading behavior among speculators.
• The high percentage of XRP supply in loss suggests potential challenges for price recovery and market stability.
• The current market composition, with many late entrants at a loss, raises concerns about the resilience of XRP’s price in the face of further downturns.
• Overall, this shift in XRP’s derivatives market reflects broader trends of caution and risk management among crypto traders.

Updated: 12/1/2025, 8:37:21 AM