Liquidation pressure in XRP on Binance has eased after months of repeated spikes, pointing to reduced stress from leveraged trading, according to a new analysis from CryptoQuant. The change comes as outstanding XRP derivatives exposure on the exchange fell sharply between late August and mid-September.
The firm said that may remove some near-term strain, but it does not by itself establish a durable recovery. Any sustained upside in XRP would still need support from spot buying, stronger trading volume, and favorable price action.
Derivatives exposure shrank as liquidation spikes faded
CryptoQuant said XRP traders on Binance have recently faced fewer forced position closures after a stretch of heavy liquidation activity from late July through September. The decline in liquidations coincided with a contraction in open interest, a measure of derivatives positions that remain active.
Binance XRP open interest fell about 32% from roughly $323 million on Aug. 22 to about $219 million on Sept. 17. That drop suggests a reduction in leveraged exposure, which can lessen the intensity of forced selling when markets move against crowded positions.
Long traders still appear more exposed
The latest readings described by the analyst still show an imbalance in positioning. Long liquidations remain higher than short liquidations, indicating that traders betting on further gains have been hit harder by recent downward price moves.
In futures markets, leverage allows traders to control positions larger than the collateral they post. When losses grow large enough to breach margin requirements, exchanges close positions automatically. That process can amplify volatility, especially when many traders are leaning in the same direction.
On-chain ratio moved lower alongside reduced forced selling
CryptoQuant also pointed to a decline in XRP’s network value-to-transactions ratio, which fell 69.28% to 36.97 during the same broader period. The metric compares market capitalization with on-chain transaction volume.
A lower NVT reading can mean transaction activity has increased, valuation has fallen, or both. On its own, the figure does not settle the market outlook, but in this case it moved lower as liquidation pressure also eased.
Spot demand remains the main test
The analysis emphasized that reduced liquidation pressure is only one part of the picture. For XRP to sustain a stronger advance, buying in the spot market would need to accompany the cooling seen in derivatives, along with higher trading volume and supportive price structure.
That distinction matters because spot purchases involve buying XRP directly, while perpetual futures let traders take price exposure without owning the asset and without a set expiry date. Futures activity can influence short-term moves, but the report said lasting strength would depend on real spot demand.
ETF flows offer an additional demand signal
Fund flows into U.S. spot XRP exchange-traded funds provide another reference point for demand. The products recorded inflows during September, although data for Oct. 2 showed net outflows of $3.28 million from Bitwise’s fund.
Across the category, spot XRP ETFs held about $1.658 billion in total assets. For now, the confirmed next test is whether spot demand, trading volumes, and price behavior begin to reinforce the recent easing in Binance liquidation pressure.
Source: news.bitcoin.com