XRP open interest hits a nine-month low… “Price direction now hinges on spot demand”

As open interest (OI) in the XRP derivatives market falls to its lowest level in nine months, an analysis suggests that the initiative in price discovery is shifting from leveraged traders to spot investors.

On the 17th, CryptoQuant analyst PellineyPA said in a Quicktake report that “XRP open interest on Binance fell from about $1.75 billion to $484.5 million.” The figure reflects a steady decline over roughly nine months. However, there is still no clear sign of spot-demand inflows.

The analyst pointed to the fact that both price and open interest declined simultaneously. Typically, if open interest rises while prices fall, it is interpreted as new short positions entering the market. In this case, however, it is seen as a deleveraging (reduction of leverage) process in which existing long and short positions are liquidated or closed. With leveraged positions reduced, the cascading downward pressure triggered by forced liquidations has eased.

That said, this also acts as a constraint on upside momentum. With less leverage entering the market, factors that can drive sharp rallies—such as a short squeeze—have also weakened. As a result, the analysis says the next price direction is more likely to be determined by whether capital flows in from spot investors rather than derivatives.

The analyst noted that “if open interest increases alongside a price rise, it can be interpreted as a signal of trend formation driven by fresh inflows,” while adding that “if open interest increases when prices are flat or falling, leveraged positions are being rebuilt, raising the likelihood of further volatility expansion.”

The analyst assessed that “aggressive leveraged selling has stopped, but strong spot demand has yet to emerge,” adding that “the market is currently in a transitional phase where both conditions coexist.”

XRP is currently trading at around $1.46 on Binance’s USDT market, slightly down from the intraday high of $1.51.

Meanwhile, open interest refers to the number of outstanding contracts for positions that traders have not liquidated in the derivatives market. In general, the higher the open interest, the greater the likelihood that a coin’s price volatility will increase.