XRP Jumps 53%, but Spot Market Stays Muted as Leverage Overheats

XRP has rallied more than 50% in recent days, but the advance was driven mainly by short covering and leverage rather than spot demand, according to an analysis.

CryptoQuant contributor CryptoOnchain wrote on Aug. 24 that XRP closed at $1.520 on Aug. 23, up about 53% from its Aug. 16 low of $0.993. The token is now approaching the top of a six-month trading range.

Overheating was most evident in derivatives markets. Binance's average XRP short liquidations over the past week reached $7.31 million, up about 2,511% from the 90-day baseline. The estimated leverage ratio, or ELR, rose to 0.213, and both measures hit six-month highs. Trading volume also jumped about 1,278% from the quarterly baseline.

The spot market, by contrast, showed little change. Binance's XRP reserves stood at 2.62 billion tokens, down just 1.4% from the 90-day baseline. On-chain transaction count rose 57% to 2.27 million from the 90-day level, while active accounts increased 26% and NVT fell 45%. Even so, CryptoOnchain said those shifts were not enough to be seen as decisive spot demand supporting the current price rally.

The risk of long liquidations is also increasing. XRP long liquidations hit $24.6 million on Aug. 23, the highest in six months and above the same day's $13 million in short liquidations. That indicates heavily accumulated long positions were being cleared out intermittently even as the token ended the day higher.

"While short covering and high leverage are driving the rally, exchange reserves have barely changed," CryptoOnchain wrote. If spot demand does not follow, XRP may remain range-bound as funding rates cool, or face large liquidations in both directions as leverage unwinds.