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$XRP now sits in a delicate position as leverage in the derivatives market continues to increase while exchange flows collapse more than 90%.
$XRP closed last week at $0.99, which brought the token to the lower end of its six-month trading range.
Amid the weakness, data reveals a divergence between the derivatives market, which has continued to record rising leverage, and the spot market, where activity has almost come to a standstill.
This situation could make $XRP more sensitive to sudden price moves. When the market witnesses less activity in the spot market to support price discovery, relatively small orders could have a larger effect on the price action.
$XRP Spot Activity Drops on Binance
One sign of the decline in spot activity comes from Binance. Recent data shows that $XRP inflows and outflows on the exchange have fallen 95% to 98% below their 90-day baselines. This suggests that far less capital is now moving through one of the market’s main trading venues.
Deposit addresses have also dropped by 96% over the same period, showing that fewer addresses are sending $XRP to the exchange. In addition, trading volume has weakened, falling 17% week-over-week.
With this decline, the spot market has less influence over price discovery and provides less support for the derivatives market.
As a result, $XRP can become more exposed to sudden moves because relatively small orders may move the price more than usual. The lack of strong bids below the current price also leaves the market more vulnerable if selling picks up.
$XRP Leverage Rises as Short Positions Build
While spot activity has faded, traders have continued to increase their derivatives exposure. For context, $XRP open interest rose from 366 million on Aug. 4 to 461 million on Aug. 16. The figure represents a 10% increase from the 30-day baseline.
The leverage ratio also increased from 0.141 to 0.176 during the same period. This shows that traders have taken on more leveraged exposure even as $XRP’s price has weakened.
Meanwhile, funding remained slightly negative, ranging from -0.003 to -0.006 as open interest increased and $XRP declined. Negative funding suggests that short positions have remained more dominant than long positions.
However, not every part of $XRP’s market picture looks weak. Specifically, daily transactions remained close to 2 million on Aug. 16, which puts network activity 43% above its quarterly baseline.
It remains to be seen if this network activity can eventually translate into demand for $XRP. For now, the two sides of the market remain separate. Network use seems healthy, while short-term price action continues to depend heavily on liquidity and leveraged trading.
$1 Becomes the Key Level
Notably, $XRP entered Aug. 17 with the $1 level at the center of the market’s attention. The level has become both a psychological and technical point of interest, just above the $0.993 close recorded on Aug. 16.
At the same time, institutional demand has weakened. $XRP ETFs recorded only $2.25 million in inflows throughout last week, reducing the support that institutional buying had recently provided.
A sustained move above $1 would put $1.02 in focus as the next immediate hurdle. $XRP recently faced rejection around that level. A break above it could then bring $1.05 into view.
However, losing $1 would leave $XRP with less support and could increase the risk of a move toward $0.80-$0.95. The weak spot market makes that risk more significant because there are fewer active bids to absorb additional selling.