The cryptocurrency market is sensing turbulence as XRP’s price experiences notable fluctuations. Over the last two days, XRP dropped 9% after facing a rejection at $2.18, eventually slipping below the $2 mark, a fall that has left traders on alert.
On Thursday, the funding rate for XRP perpetual futures plunged to a staggering -20%, marking its lowest point since a market crash on October 10. Such deep negative funding rates indicate a significant bearish stance among traders, as sellers are essentially paying buyers to keep their positions open, reflecting a lack of bullish sentiment.
When normal market conditions prevail, funding rates typically hover between 6% and 12%, but the current figures reveal a market hesitant to regain bullish momentum. History shows that deeply negative funding rates can sometimes foreshadow a market reversal, but with traders showing reluctance to increase their positions, the outlook remains uncertain.
The aggregate open interest in XRP futures has stagnated at $2.8 billion, down from $3.2 billion in late November, illustrating waning trader confidence. The price has plunged an astonishing 45% since reaching $3.66 in July, prompting some market analysts to question the resilience of XRP.
ETF Activity Declines
The hesitation among traders could be attributed to the dimming activity surrounding XRP exchange-traded funds (ETFs) listed in the U.S. Initially, traders entered November with high expectations, but these inflows and trading activities dwindled substantially within weeks. Currently, assets under management for XRP ETFs are stagnant at approximately $3.1 billion, which pales in comparison to Solana ETFs that boast $3.3 billion.
Trading volume for U.S.-listed XRP ETFs rarely surpasses $30 million daily, a level that dampens institutional interest, further compounding holders’ frustrations with the currency. The tepid demand for XRP in the derivatives market is more noticeable as total value locked (TVL) on the XRP Ledger has dwindled to $68 million, its lowest level of 2025, indicating a decline in engagement with decentralized applications.
Market Competition Intensifies
Adding to XRP’s challenges is the intense competition from other blockchain technologies. For instance, Ripple USD issuance has surged beyond $1 billion on Ethereum while the XRP Ledger barely holds $235 million of the stablecoin. Concurrently, the Stellar blockchain is flaunting a TVL of $176 million, despite its market cap being 93% smaller than that of XRP, which stands at $121.8 billion.
As blockchains such as BNB Chain and Solana enhance their foothold within the decentralized applications ecosystem, the reduced activity on the XRP Ledger creates a debilitating cycle, leading to fewer incentives for investors to hold XRP amid a supportive environment.
In a bid to reignite interest, 21Shares launched its XRP ETF (TOXR) on the CBOE exchange on Thursday. This fund aims to provide investors with a transparent and straightforward means to gain exposure to one of the most talked-about cryptocurrencies in the market. The ETF launch followed closely on the heels of similar initiatives by Grayscale, Canary Capital, and REX Shares.
As the landscape unfolds, stakeholders remain cautious. While the introduction of the TOXR ETF presents an opportunity, the broader hesitation in the XRP ecosystem could slow market recovery. Custodians such as Coinbase, Anchorage Digital Bank, and BitGo are lined up to support this ETF, but whether this will translate into renewed trading activity remains to be seen.
