XRP derivatives traders boost leverage as funding costs jump
A slow but clear divergence is emerging in XRP’s derivatives market: open interest has eased modestly over the past month, but the amount of leverage employed by traders is steadily rising.
With spot demand softening and funding rates climbing to near their monthly highs, XRP appears to be entering a phase of elevated positioning risk, even as its price action remains relatively stable.
As of June 10, open interest across all exchanges totaled $1.67 billion, down about $39 million from May 11. This 2.3% decline is moderate, but more importantly, it follows a spike of $2.10 billion reached on May 13, showing that the market has already undergone some deleveraging.
However, despite the decline in total notional OI, traders aren’t backing off risk. The estimated leverage ratio for XRP on Binance has increased by 3.8%, inching closer to its ATH of 0.324. Traders are paying more to keep XRP longs alive, a shift that contrasts with fading open interest and tempered taker flow.
The discrepancy between the decrease in OI and the increase in leverage shows that traders are keeping their positions leaner in dollar terms while ramping up per-coin exposure. While this trend is still in its early days, it often precedes breakouts or forced unwinds.
Parallel to this, XRP’s perpetual futures funding rate has risen significantly. The average across exchanges stood at 0.016% on June 10, up from 0.010% one month earlier. That figure may appear small, but it reflects a meaningful jump in the cost of holding long positions.
Funding hasn’t consistently stayed this elevated since mid-May. Notably, the seven-day moving average has also climbed, signaling that this isn’t a one-off fluctuation: it shows a persistent willingness to pay for bullish exposure.
The rising funding rates and high leverage create an uncomfortable pressure point for traders. The longer the market fails to rally, the greater the risk that long traders lose patience and unwind.
Spot market behavior reinforces that caution may be warranted. XRP’s 90-day cumulative spot taker volume delta (CVD), a proxy for net aggressive buying or selling, has dropped 3.3% since May 11. While this may not seem dramatic, it marks the first sustained pullback in spot buying pressure since early April.
This reversal in cumulative spot flow suggests that some traders are stepping back after weeks of accumulation. We are yet to see whether this translates into active selling or simply a reduced appetite for risk, but the data shows less momentum in the spot market.
The taker buy-sell ratio for XRP currently stands at 0.958, up from 0.905 a month ago. Although it has been hovering around parity, it dipped just below 1 several times in the past 10 days. This shows a market that lacks a decisive directional bias: buyers aren’t convincingly in control, and sellers aren’t pressing their advantage either.
However, in the context of rising funding rates and high leverage, this kind of balance often precedes a sharp move once either side prevails.
The overall picture is one of crowded but cautious positioning. Traders are willing to retain leverage and, in some cases, even increase it, but they’re also wary of overcommitting amid weakening spot flows.
The reluctance to abandon bullish bets is evident in the elevated funding rates, while the pullback in open interest suggests some trimming has already occurred.
That mix often creates a stress pocket: if prices move sideways too long or start to slide, long holders facing a growing funding burden may opt to cut positions, triggering a cascade of liquidations.
This hasn’t happened yet, and the XRP derivatives market still looks orderly. But the balance is precarious.
As leverage edges higher and carry costs increase, any negative external trigger, be it regulatory news, a broader market sell-off, or even a brief liquidity vacuum, could tip the market into a sharp repositioning.
Conversely, if XRP breaks to the upside, the current setup could amplify gains, with sidelined capital rushing to re-enter on momentum.
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