On-chain data from Glassnode reveals that 36.8 billion XRP tokens are currently held underwater, translating to $50.8 billion in aggregate unrealized losses across the XRP holder base. For derivatives traders, this scale of trapped capital carries direct implications for perpetual funding dynamics, liquidation risk, and near-term price discovery.
How Did XRP Get Here?
XRP reached a new all-time high of $3.65 in July 2025, driven largely by the resolution of the SEC v. Ripple lawsuit and the subsequent wave of spot ETF approvals in late 2025. The regulatory clarity acted as a structural catalyst, pulling in both retail and institutional flows and compressing short interest significantly at the time.
That momentum has since reversed sharply. As of mid-2026, XRP has declined more than 63% from its July 2025 peak. CoinGecko data shows the asset is down approximately 8% over the past 30 days and has shed 42.2% since March 2025. The broader market deterioration began in October 2025, when the crypto market recorded its largest single-day liquidation event in history — a cascade triggered by a confluence of macroeconomic pressure, geopolitical stress, and a sharp contraction in on-chain and off-chain liquidity.
How Does This Affect XRP Perpetual Markets?
With $50.8 billion in unrealized losses sitting across the XRP holder base, the derivatives market faces a structurally heavy overhead. Here is what traders should be monitoring:
Funding Rates
Extended bearish conditions typically push perpetual funding rates negative as short pressure dominates. As of current market conditions, XRP perp funding has been oscillating near neutral to slightly negative, suggesting limited conviction from both sides. A sustained push below -0.01% per 8-hour interval would indicate a more aggressive short bias building in the market.
Liquidation Clusters
The $3.65 all-time high and the $2.00–$2.50 range represent significant liquidation zones for any leveraged longs established during the 2025 rally. Any recovery attempt toward those levels could trigger cascading long liquidations from positions that have been averaging down, adding volatility to upside moves rather than clean trend continuation.
Open Interest Dynamics
Declining open interest alongside price suppression typically signals capitulation and position unwinding rather than active shorting. Traders should watch for a divergence — specifically, rising open interest while price stabilizes — as an early signal that fresh directional bets are being placed, which often precedes a volatility expansion event.
Are There Structural Catalysts for Recovery?
Despite the drawdown, several macro-level catalysts remain relevant for XRP's medium-term trajectory. The spot ETF products launched in late 2025 provide an institutional access layer that did not exist during previous XRP bear cycles. Bitcoin's trajectory post-ETF approval in 2024 demonstrated that ETF-driven inflows can materially shift the supply-demand balance over a 12–18 month window. If a comparable pattern develops for XRP, the current price range could represent a structural accumulation zone rather than continued distribution.
CNBC coverage in early 2026 labeling XRP the "hottest crypto deal" of the year reflects growing mainstream interest, though traders should treat sentiment-driven narratives as lagging indicators rather than actionable signals on their own.
The key variable remains macro conditions. The October 2025 liquidation event underscored how sensitive crypto markets — including XRP perp markets — are to external liquidity shocks. Until risk appetite stabilizes at the macro level, recovery attempts are likely to face sustained selling pressure from the large cohort of underwater holders looking to exit near breakeven.
Trading Implications
- Overhead supply is substantial:
36.8 billionXRP tokens in loss create persistent sell pressure at any meaningful price recovery, particularly in the$2.00–$3.65range. - Monitor funding rates closely: A shift from neutral to deeply negative funding (below
-0.01%per 8-hour period) would signal aggressive short buildup and a potential short-squeeze setup. - Liquidation map awareness: Leveraged long positions established during the 2025 ATH run remain at risk on any partial recovery; expect elevated volatility rather than smooth upside continuation.
- ETF inflows as a structural watch: Sustained spot ETF volume growth in XRP products could shift the supply dynamic over a multi-month horizon — track weekly ETF flow data as a leading indicator.
- Macro dependency remains high: XRP perp markets are unlikely to decouple from broader risk-off conditions; BTC dominance trends and macro liquidity signals should anchor any directional bias on XRP derivatives.
- Avoid overleveraged longs in current conditions: The combination of heavy unrealized losses, a
63%drawdown, and uncertain macro backdrop makes high-leverage long positioning asymmetrically risky at this stage.