XRP Derivatives Market Undergoes Violent 59% Deleveraging As Speculative Fervor Evaporates.
XRP's derivatives market has experienced a dramatic unwinding of leveraged positions, with futures open interest collapsing by approximately 59% since early October, according to blockchain analytics firm Glassnode. The deleveraging coincides with funding rates compressing to near-neutral levels, marking what analysts describe as a structural regime shift in trader sentiment away from aggressive upside positioning.
The sharp contraction in speculative activity comes as XRP trades around $2.20, having failed to sustain levels above $3 reached earlier this month. The token's derivatives market now exhibits characteristics of a risk-off environment, with approximately 41.5% of circulating supply - roughly 26.5 billion XRP - sitting underwater despite prices trading four times higher than November 2024 levels.
What Happened
Glassnode data shows XRP futures open interest plummeted from 1.7 billion tokens in early October to just 700 million tokens by late November. This represents the closure, liquidation, or unwinding of approximately one billion XRP worth of derivatives exposure—a wholesale deleveraging that strips away a substantial portion of the speculative layer that had accumulated atop the spot market.
The seven-day simple moving average of perpetual futures funding rates dropped from approximately 0.01% to just 0.001% over the same period, according to Glassnode's CryptoVizArt. Funding rates represent the cost traders pay to maintain leveraged long positions in perpetual futures contracts. The compression to near-neutral levels indicates demand for leveraged upside exposure has largely evaporated, with traders no longer willing to pay meaningful premiums to hold long positions.
Glassnode identified October 10 as the inflection point marking "a structural pause in XRP speculators' appetite to bet aggressively on upside." Prior to that date, consistently elevated funding rates and expanding open interest signaled persistent bullish positioning and willingness to maintain leveraged exposure even as premiums mounted.
On-chain metrics paint a similarly cautious picture. Only 58.5% of XRP's circulating supply currently sits in profit—the lowest percentage since November 2024 when the token traded at $0.53. Despite XRP now changing hands around $2.20, this means 41.5% of holders remain underwater on their positions, creating what Glassnode describes as "a clear sign of a top-heavy and structurally fragile market dominated by late buyers."
Network activity has similarly contracted. Data from Santiment reveals daily active addresses on the XRP Ledger have fallen to approximately 19,200 - a dramatic decline from the 581,000 peak recorded in mid-June. This reduction in on-chain engagement mirrors the quiet tone prevailing across derivatives markets.
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Why It Matters
The magnitude and velocity of the derivatives deleveraging signals a fundamental shift in how traders view XRP's near-term prospects. Unlike typical tactical position adjustments, the 59% collapse in open interest represents a structural unwinding that suggests sustained caution rather than temporary profit-taking.
The timing proves particularly notable given the recent launch of spot XRP exchange-traded funds. The Grayscale XRP ETF and Franklin XRP ETF both debuted on November 25, attracting $164 million in combined first-day inflows. This institutional interest provides a counterbalance to the derivatives market's retreat, though the divergence between spot demand and futures positioning highlights a fractured market dynamic.
The compression in funding rates to 0.001% creates a more balanced playing field for both long and short positioning. When funding rates hovered around 0.01%, the recurring cost of maintaining leverage created a bias toward closing positions or switching to spot exposure. The current near-neutral environment removes this friction, though it also indicates bulls have lost conviction in paying for upside optionality.
XRP was trading at $2.04 at press time.
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