XRP Traders Lose Appetite for Aggressive Upside Bets as OI Crashes 59%

XRP open interest has dropped tremendously since the October 10 crash, as traders lose interest in aggressive leveraged exposure.

Notably, XRP has taken another leg lower over the past 24 hours, as Bitcoin briefly fell below $86,000. The crypto asset experienced a 6.7% correction, pushing its price to $2.05 at the time of writing.

Dwindling XRP OI

Meanwhile, the XRP price is not the only thing falling; the token’s futures open interest (OI) is following a similar trajectory. Data from Glassnode shows the metric has been in a downtrend since early October, as market speculators have shown a deteriorating interest in leveraged exposure to XRP.

The tweet highlighted that XRP’s futures OI has collapsed from $1.7 billion in early October to $780 million on November 30, representing a 59% flush. Glassnode noted that the October 10 crash was a significant catalyst for this “structural pause,” as uncertainties emanating from the price action have tamed wild bets on XRP’s upside.

For the uninitiated, October 10 holds the record for the highest single-day liquidation in crypto’s history. XRP dropped to $0.77 from $2.27 on Binance in minutes, with most other assets recording a similar trend. This move wiped out $19 billion in 24 hours.

Funding Rate Drops

Moreover, a decline in the funding rate further highlights a skew away from XRP upside bets. Glassnode shared, using the 7-day simple moving average, that the perpetual funding rates have moved from 0.01% to 0.001% across all exchanges.

Funding rates are usually what perpetual traders pay or earn to keep their positions, depending on whether the rate is positive or negative. Interestingly, XRP’s funding rate tilts towards zero, suggesting a lack of confidence among market users that the asset would log in higher prices in the near term.

Flush Could Spell Bullish Momentum for XRP

Meanwhile, some analysts suggest that the declining OI could spell bullish momentum. They view the downtrend as a market reset aimed at shaking out overleveraged positions and grabbing liquidity before the next impulsive move.

Furthermore, the XRP long/short ratio also adds bullish prospects. CoinGlass data shows a long/short ratio of 2.69 on the XRP/USDT pair on Binance, suggesting an obvious bullish account dominance over short bets.

The same is seen on OKX. The exchange records a long/short ratio of 2.29, as more accounts are betting on an XRP rebound to higher prices despite the recent downtrend.

Increasing volume also adds to the momentum. Specifically, CoinMarketCap data shows a 91% uptick in 24-hour XRP trading volume to $3.88 billion.