XRP has entered a critical phase after losing the $1.80 level and sliding towards the $1.60 area, where the price is now trying to find short-term support. The move comes amid broader weakness across the cryptocurrency market, but XRP’s structure is showing an additional layer of pressure beyond spot price action. According to a recent report from CryptoQuant, the derivatives side of the XRP market is seeing a sharp contraction in leverage, indicating a tangible shift in trader behavior.
The data shows that open interest across all XRP derivatives platforms has fallen to approximately 902 million, which represents its lowest level since 2024. This is a stark contrast to the conditions seen during 2025, when open interest was consistently hovering between 2.5 and 3.0 billion. The magnitude of this decline suggests that leverage is being actively unwinded rather than simply rotating between exchanges, suggesting a broader adjustment to risk aversion.
Such contractions often reflect a market de-risking after extended volatility. With fewer leveraged positions, price movements tend to become slower but more deliberate, as speculative excess is eliminated. As XRP tests the $1.60 area, analysts are closely watching whether this leverage reset will lay the groundwork for stability — or signal a continuation of a deeper downtrend.
A leverage reset indicates a potential base building phase
The report adds important color by detailing where leverage reductions occur. On Binance, open interest in XRP derivatives fell to around 458 million. While this number is still higher than the levels observed last December, it still represents a sharp contraction from the highs seen earlier in the cycle.
Importantly, this decline on Binance mirrors what is happening across other major trading venues, reinforcing the view that the market is going through a broad tapering phase rather than simply migrating positions between exchanges.
This is structurally important. When open interest is compressed simultaneously across platforms, this typically reflects traders actively reducing risk and closing leveraged exposure. This type of environment is often preceded by periods of price consolidation, as the market absorbs previous fluctuations and searches for a new equilibrium. In past cycles, these phases often led to the formation of basic structures, especially when selling pressure and volatility pressure faded.
Looking ahead, analysts point out that any recovery in open interest will be crucial to watch. A rebound in leverage that coincides with improving price momentum can serve as an early signal that a new trend is developing.
However, at the moment, open interest falling to its lowest level since 2024 indicates a clear market clean-up. While this reset may appear quiet on the surface, it could provide a sounder foundation for future moves – provided risk management remains front and center in the next phase of the XRP market’s evolution.
XRP price shows weakness
XRP price action continues to reflect structural weakness as the asset trades decisively below its key moving averages and tests the $1.60 area for support. The chart shows a clear transition from the previous uptrend to an ongoing downtrend, which is characterized by lower highs and lower lows since the October peak near the $3.50-$3.60 area. Momentum has steadily deteriorated, with each bounce below the short and medium-low moving averages failing, indicating continued seller control.
Losing the $1.80 level is technically significant. This area served as a consolidation base and a demand area, but a clean breakout suggests that buyers have stepped aside rather than aggressively defending the price. XRP is now trading below the 50-day and 100-day moving averages, while the 200-day moving average continues to slope lower, reinforcing the medium-term bearish structure.
Trading volume remains relatively weak compared to previous distribution phases, which is consistent with derivatives data showing a contraction in leverage rather than panic-driven liquidation. This supports the view that the current movement is more of a controlled relaxation than a surrender event.
As long as the price remains in the USD 1.55-1.60 area, XRP may try to stabilize and form a base. However, failure to hold this area would expose the market to a deeper bounce towards the previous demand areas near $1.30-$1.40.
Featured image from ChatGPT, chart from TradingView.com
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