XRP activity shows how leverage helped drive its recovery toward $1.60 before a reversal led to more than $610 million in liquidations.
Throughout September and early October, XRP’s price recovery coincided with a steady increase in futures open interest. This suggested that traders were opening more leveraged positions as they expected prices to rise further.
However, the Oct. 11 liquidation event wiped out a large number of bullish positions and has since left XRP struggling to regain its upward momentum.
XRP August Decline Reduced Market Leverage
XRP came under heavy pressure in mid-August, when its price fell to around $1. Open interest in its derivatives market also dropped to around $360 million, one of the lowest levels shown on the chart.
For context, open interest measures the value of outstanding futures contracts and helps show how much money traders have committed to the derivatives market. The decline alongside XRP’s price indicated that traders were cutting their exposure as the market weakened.
While this drop showed reduced XRP trading activity, it also lowered the amount of leverage in the market. With fewer leveraged positions open, there was less risk of forced selling. This helped reduce some of the pressure that had weighed on XRP during the decline.
Rising Leverage Helps XRP Reach $1.60
However, XRP began recovering through September, with the rally continuing into early October. As the price climbed into the $1.55-$1.60 range, open interest rose alongside it, reaching around $620 million.
The increase suggested that the rally was not driven by spot buying alone. Notably, traders were also opening new futures contracts to benefit from the rising price. While this activity helped support XRP’s push, it also increased the market’s exposure to a sudden reversal.
During this period, Binance’s average XRP open interest over the previous 30 days reached $511 million, its highest level in eight months. This showed that traders had built up substantial derivatives positions as XRP approached its recent highs.
However, the growing use of leverage also increased the risk of widespread liquidations if prices fell. As more traders bet on further gains, a sudden reversal could force many to close their positions, adding to selling pressure.
Oct 11 Triggers More Than $610 Million in Liquidations
The situation worsened on Oct. 11, when more than $610 million in XRP long positions were liquidated across Binance, OKX, and Bybit in a single day. The event marked the largest single-day liquidation in XRP’s recorded history.
The sell-off gained momentum as falling prices forced bullish traders to close positions that no longer met margin requirements. These forced sales added pressure to the market, pushing prices lower and exposing more leveraged traders to liquidation.
The scale of the losses showed the risks that had built up during XRP’s rally through September and early October. As open interest climbed, more traders positioned themselves for further gains. When the price reversed, many of those positions came under pressure at the same time.
XRP Open Interest Rises Again as Price Struggles
Currently, XRP changes hands around $1.37, below the $1.55-$1.60 range it reached during the rally. Binance open interest currently stands at $467 million in notional value, still below its recent peak figures.
However, open interest had increased by 2.48% over the previous 24 hours. This suggested that traders were beginning to open new positions after the liquidation event, even as XRP continued to face pressure in the spot market.
Funding rates also remained positive, indicating that long positions continued to dominate the perpetual futures market. However, XRP’s failure to make a sustained move higher suggested that this renewed bullish positioning had not yet translated into a stronger recovery.
Demand in the spot market showed a more encouraging sign. According to SoSoValue data, XRP exchange-traded funds recorded $11.31 million in inflows during the week ending Oct. 9.
What Could Happen Next?
XRP may need more time to recover from the October liquidation event. Although traders have started adding new futures positions, the market still needs stronger buying demand to support a sustained price increase.
If traders continue to build leveraged long positions too quickly, another price decline could trigger fresh liquidations. This could keep XRP moving within a narrow range as forced selling offsets new buying.
Ultimately, XRP’s ability to return toward $1.60 may depend on whether spot buyers can provide enough support to reduce the market’s reliance on leverage.