XRP Faces Major Deleveraging After $610M Long Liquidations: What Lies Ahead?
XRP has recently undergone a significant deleveraging event following a staggering $610 million in long-side liquidations on October 11, marking one of the most dramatic resets in its derivatives market in 2025. This event triggered a sharp decline in Open Interest, plummeting from $8.47 billion to $4.14 billion within a matter of days. The result was a steep drop in the Estimated Leverage Ratio (ELR), which fell to just 0.155 — its lowest point this year — indicating a widespread unwinding of over-leveraged positions.
This kind of sudden contraction in leveraged positions is typically symptomatic of a liquidation cascade. In other words, as long traders were forcefully exited from the market, a chain reaction of stop-loss triggers and margin calls accelerated the downward momentum. Back on July 16, XRP was trading at $3.41 when the ELR stood at 0.59. The contrast with the current 0.155 ELR and a price of $2.50 illustrates the scale of this market reset.
While some might interpret this as a bearish signal, others see it as a potential foundation for recovery. A market with reduced leverage is often considered healthier and less vulnerable to sudden price shocks. However, any optimism must be tempered by current market dynamics, which remain fragile.
Whale Activity Slows, But Risks Persist
One of the key indicators fueling recent bearish sentiment has been the increased inflow of XRP from whale wallets to centralized exchanges, particularly Binance. This typically signals that large holders are preparing to offload their assets, exerting additional selling pressure on the market. However, in recent days, these inflows have started to decline. If this trend continues, it could suggest that the intense selling phase is nearing its end, potentially setting the stage for price stabilization.
That said, caution is warranted. Despite the slowdown, the Taker Buy/Sell Ratio has remained consistently below 1 over the past few months, which means sell orders from takers have outpaced buy orders. This imbalance has kept the market sentiment firmly bearish, as sellers continue to dominate price action.
Technical Barriers Ahead: Psychological Resistance at $3
On the technical front, XRP faces a cluster of resistance levels that could hinder any bullish breakout attempts. The most immediate challenge lies in the psychological $3 level, but even before reaching that threshold, bulls will have to clear the $2.77 zone — the upper boundary of a price imbalance that stretches down to $2.50. Overcoming the local high at $3.09 on the daily chart would be essential to shift the market structure from bearish to bullish.
Until that structural shift occurs, swing traders are advised to stay on the sidelines or tread carefully with long positions. Any sustainable rally will likely require a combination of factors: renewed demand, declining whale selling pressure, and a rebound in Open Interest.
Altcoin Recovery Hinges on Bitcoin Momentum
Another critical factor influencing XRP’s recovery prospects is Bitcoin’s price trajectory. Analysts are closely watching whether BTC can break above the $117,000 level. A confirmed breakout would likely reignite bullish momentum across the crypto market, including altcoins like XRP. Until then, XRP remains vulnerable to broader market headwinds.
Spot Market Sentiment Still Subdued
Despite the deleveraging in derivatives, the spot market hasn’t shown signs of robust demand returning. Cautious sentiment prevails, with many investors opting to remain on the sidelines until clearer recovery signals emerge. Without a surge in spot buying, any price rally would lack the fundamental support needed for sustainability.
Key Metrics to Watch in the Coming Days
1. Open Interest (OI): A continued uptick in OI, particularly if paired with price increases, would indicate growing confidence and trader commitment.
2. Estimated Leverage Ratio (ELR): A gradual rise in the ELR, after hitting historic lows, could suggest that traders are cautiously re-entering the market.
3. Whale Inflows: Sustained decline in large wallet transfers to exchanges would alleviate selling pressure.
4. Taker Buy/Sell Ratio: A shift above 1 would signal that buyers are beginning to regain control.
5. BTC Price Movement: A BTC rally above $117k would be a strong catalyst for altcoin recovery.
Is a Recovery Possible Soon?
While the current state of the market appears bearish, the groundwork for a potential recovery is being laid. The deleveraging event has flushed out excess speculation, and the slowing whale inflows hint that selling exhaustion may be near. However, without confirmation in the form of stronger demand and bullish technical breakouts, the market could remain rangebound or even retest support levels.
For XRP to reclaim momentum, it must decisively break above $3.1 and establish support above that level. Until then, both short-term traders and long-term investors should remain vigilant and avoid chasing speculative rallies.
Looking Ahead: A Time for Patience and Strategy
In volatile markets like crypto, sharp corrections often precede strong comebacks — but only when key fundamentals align. XRP’s recent cleansing of over-leveraged positions is a necessary, albeit painful, step toward a more stable growth trajectory. For now, the best approach is cautious observation, waiting for clear signs of accumulation and trend reversal before making bold investment moves.
As the market adjusts to the post-liquidation environment and macro factors such as Bitcoin’s trajectory come into play, XRP’s path forward will become clearer. Until then, patience and disciplined risk management remain the most valuable tools for any trader or investor navigating this uncertain phase.