Due to the high levels of leverage that remain in the market, the recent decline in the value of Ripple [XRP] has resulted in a large-scale derivatives reset. At its peak during this period, nearly $3 million in long positions were liquidated, forcing bullish traders out of their exposure.
Moreover, Funding Rates have turned sharply negative, reflecting strong bearish conviction about XRP’s future price action. Additionally, the Open Interest (OI) dropped from approximately $1.18 billion to approximately $1.04 billion.
These factors indicate that the removal of leverage-driven selling pressure by speculative excess is beginning. Although the stable Binance reserves show that spot holders are still unwilling to sell aggressively.
If OI begins to rebuild along with the improving funding rate, then XRP may begin to trend upward towards a healthier recovery. However, if these trends do not start occurring simultaneously, then bearish momentum will likely continue.
XRP enters a historically oversold zone
As long-term declines continue for XRP, it is possible for the overall market to enter historically extreme downside risk conditions as sellers continue to outpace buyers.
Additionally, the prolonged decline has caused the Sharpe Z-Score to drop deeper into negative territory. These levels mirror the extreme reading before the November 2024 breakout and the July 2025 rally.
Even so, XRP remains near $1.03, well below its 200-day Moving Average, confirming buyers have not yet regained control of the broader trend. This combination suggests downside momentum may be becoming exhausted rather than accelerating further.
If fresh spot demand returns and price reclaims key technical levels, the current reset could evolve into another recovery phase. Otherwise, XRP may continue consolidating until stronger buying confirms the historical signal.
Final Summary
- XRP deleveraging is reducing speculative excess, but stronger spot demand remains essential for a sustained recovery.
- XRP’s historical oversold signals suggested that a downside was stretched, yet bullish confirmation still depends on renewed buying pressure.
