Due to the high levels of leverage that still exist in the market, the recent decline in the value of Ripple (XRP) has led to a widespread reset of derivatives. At its peak during this period, nearly $3 million worth of long positions were liquidated, forcing bullish traders to exit their exposures.
Furthermore, funding rates turned sharply negative, reflecting a strong bearish sentiment regarding future XRP price movement. Additionally, open interest (OI) decreased from approximately $1.18 billion to approximately $1.04 billion.
These factors indicate that the removal of leveraged selling pressures through excessive speculation has begun. Although Binance stablecoin reserves show that spot holders are still unwilling to sell aggressively.
If OI starts rebuilding along with the funding rate improves, then XRP It may start an upward trend toward a healthier recovery. However, if these trends do not begin to occur simultaneously, the downward momentum is likely to continue.
XRP is entering a historically oversold zone
As XRP continues its long-term decline, it is possible that the overall market will enter into historically extreme downside risk conditions as sellers continue to outperform buyers.
Additionally, a prolonged decline has taken the Sharpe Z-Score deeper into negative territory. These levels reflect extreme readings before the November 2024 breakout and the July 2025 high.
However, XRP remains near $1.03, well below the 200-day moving average, confirming that buyers have not yet regained control of the broader trend. This combination suggests that downward momentum may have exhausted rather than accelerating further.
If new spot demand returns and the price regains key technical levels, the current reset may develop into another recovery phase. Otherwise, XRP may continue to strengthen until strong buying confirms the historical signal.
Final summary
- Deleveraging XRP reduces speculative surplus, but stronger immediate demand remains essential for a sustainable recovery.
- XRP’s historical oversold signals indicate that the downtrend has extended, but bullish confirmation remains dependent on renewed buying pressure.
