XRP has experienced a notable increase in spot trading on Binance from July 4 to July 8, despite a downturn in the derivatives market. According to a report from CryptoOnchain on CryptoQuant, this shift indicates that capital is flowing into the spot market while leveraged positions are unwinding.

Spot Trading Insights

On July 7, inflows into XRP spot trading reached 64.9 million XRP, significantly higher than the 49.2 million XRP outflows recorded during the same period. However, this surge in spot activity has not been sufficient to reverse the decline in the derivatives sector. Open Interest for XRP on Binance has dropped from over $500 million in mid-June to $431 million by July 4, further decreasing to $399 million by July 10.

In tandem, long liquidations surged by 94% compared to the previous week and stood at 172% above the three-month average, while short liquidations fell by 53% during the same timeframe.

Funding Rates and Market Performance

Interestingly, although Open Interest has continued its decline, Binance's funding rates have rebounded after briefly dipping into negative territory in late June. They increased by 266% week over week, reaching 0.007. The dynamics suggest that new long positions are being established at higher premiums, even as the overall leverage diminishes.

The on-chain data for XRP presents a more stable outlook compared to its derivatives market. Active addresses remain 11% lower than the three-month average, indicating that full recovery in network activity is still pending. However, transaction volume has seen a slight rise of 3% to 4% over the last week and month, although it remains 21% lower than the three-month average. A drop in the Network Value to Transactions (NVT) ratio may signify that network utilization is stabilizing.

Prospects for Future Funding-Rate Reset

CryptoOnchain suggests that the current market conditions, characterized by increasing funding rates, decreasing Open Interest, and significant long liquidations, historically precede funding-rate resets. The realization of this scenario will depend on trader responses to the widening gap between elevated funding rates and reduced leveraged participation.

Additionally, CryptoQuant analyst Darkfost pointed out that the XRP derivatives market has hit extreme bearish levels recently, with funding rates on Binance sinking deeply negative. He noted that excessive short positions could signal a potential reversal, reminiscent of conditions observed in April 2025. For further context on market dynamics, see our article on recent derivatives activity.

This material is for informational purposes only and should not be considered financial advice.