Why Is XRP Price Down Today After a 44% Weekly Rally?

• XRP-USD

• XRP fell nearly 5% to around $1.44 after gaining roughly 44% in a week, with the latest decline following another rejection above $1.50.

• Binance’s XRP leverage ratio has climbed to its highest level since January, while futures volume is running more than five times spot volume and traders are heavily tilted long.

• The pullback is happening despite nine straight days of XRP ETF inflows, suggesting the immediate weakness stems from profit-taking and an overheated derivatives market rather than from institutions abandoning XRP.

XRP is giving back part of its explosive weekly rally, but the latest decline looks less like the disappearance of demand and more like a market struggling to digest how quickly leverage returned.

XRP traded near $1.44 on Aug. 26, down almost 5% over 24 hours, after briefly trading above $1.50.

The token has remained up roughly 44% over the past seven days, following its rebound from around $1 in mid-August.

Three pieces of data help explain why a token with positive ETF flows and bullish whale positioning is falling anyway.

XRP Leverage Just Hit a Seven-Month High

The most important change is happening in derivatives.

CryptoQuant reported that XRP’s estimated leverage ratio on Binance has reached its highest level in more than seven months.

The ratio compares futures open interest with <a href="https://www.ccn.com/news/crypto/xrp-price-29-tyler-winklevoss-ripple-army-win-gemini-singapore-xrpl/” rel=”nofollow noopener” target=”_blank”>XRP reserves held on the exchange, so a rising reading means traders are building increasingly leveraged exposure relative to available exchange inventory.

CryptoQuant’s original interpretation was not necessarily bearish. It said that when higher leverage arrives alongside rising price and open interest, it can show growing confidence and fresh positions entering the market.

That was effectively what happened during XRP’s rally.

The problem starts when the price changes direction.

XRP futures open interest now stands at around $3.45 billion, with roughly two Binance accounts long for every one short. Among Binance’s top traders, that ratio is closer to three-to-one.

Once a market becomes heavily tilted to the long side, a modest decline can force leveraged buyers to close out. Those forced sales push prices lower, potentially triggering the next group of liquidations.

Around $18.9 million in XRP positions were liquidated over the past 24 hours, with approximately $15 million from longs.

The same leverage that accelerated XRP upward can therefore accelerate the correction.

Futures Are Trading More Than Five Times as Much as Spot XRP

There is another unusually large imbalance underneath the rally.

Source: finance.yahoo.com