Short position accumulation drives XRP open interest recovery over the past week

Ripple’s XRP is mostly avoided by retail traders, but it is becoming a competitive field between whales and professional traders. In the past week, open interest recovered by 30% in a battle between bearish derivative positions and bullish whale buyers. 

XRP open interest rose from $1B to around $1.3B in the span of a week, showing a fast recovery after the latest market downturn. XRP traded at around $1.32, after bouncing with the rest of the market. The asset has been trading in a relatively small range and is almost forgotten by retail. 

At the same time, whales and derivative traders have taken over, with regular price swings and significant liquidations. XRP also stands at a strong price point, though not yet in the overbought zone based on the RSI index.

This positioning has caused an attempt to short the asset, with local accumulation of short positions on selected exchanges.

The rising open interest for XRP is mostly due to crypto insiders. On the CME Group market, XRP derivative trading slowed down in the past week. Demand from ETFs is also relatively weak, as ETF holders are carrying around $440M in unrealized losses. 

XRP open interest rises on Binance

Binance and Bybit showed significant growth in XRP open interest, displacing the recent accumulation of trades on Hyperliquid. Binance carries $542.7M in open interest, rising by around 2.4% in the past day.

As of November 5, Binance also showed a rapid buildup of short positions, far surpassing the growth of long positions. 

XRP trading has also accelerated since the Binance hack, as the asset is part of the hacker’s portfolio. The XRP from the hack is yet to show up on the market, and Ripple has announced the tokens cannot be frozen. 

Additionally, XRP positioning trackers have noted a spike in XRP open interest on Bitfinex. The exchange is a venue for fast buildups and liquidations of XRP short positions. 

The prevalence of short positions also suggests the XRP rally above $1.30 is expected to break down soon. Inversely, the short positions may lead to a squeeze, liquidating positions up to $1.35. Even with a short squeeze, XRP may remain range-bound, becoming a speculative token for short-term price swings.

XRP whales keep buying as asset remains resilient 

XRP has proven relatively resilient to recent turbulence, including the Binance hack. XRP was not affected by the recent bug discovery on the XRP Ledger network, which may have allowed unlimited token minting. 

XRP is also closely watched for whale withdrawals, shrinking the immediate supply on Binance. As of November 1, around 50M XRP were withdrawn from Binance, based on Cryptoquant analysis. Over time, around 68% of the XRP supply is held in whale wallets, as professional traders and large-scale holders have absorbed the selling from retail owners. 

XRP was also withdrawn from Gate and Upbit, with 54M leaving the exchanges for self-custodial wallets. Exchange outflows continued to expand as of November 5, with 13.24M leaving centralized markets.

For now, self-controlled XRP holdings have limited utility. XRP trading is minimal on decentralized exchanges. Ripple’s XRP Ledger still holds limited liquidity compared to other DeFi networks. The only role of whale holdings is to contract the available supply. 

XRP analysis based on demand signals and derivative open interest suggests the asset may have found its local bottom. While crypto remains unpredictable, XRP is seen as potentially breaking out to a higher range after months of relative stagnation. 

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