Key facts
- XRP's estimated leverage ratio on Binance reached 0.213, the highest since January.
- The metric compares derivatives open interest against XRP reserves on the exchange.
- Futures volume for XRP hit $6.4 billion in 24 hours, with open interest at $3.45 billion.
- Binance increased its maximum leverage for XRP trading from 5x to 10x.
- The XRP price saw a 44% rally in the past week.
The XRP leverage ratio on Binance has reached its highest point in over seven months, hitting 0.213, following a significant 44% weekly price rally. This surge in leverage indicates a substantial increase in borrowed funds being deployed in the derivatives market, with open interest climbing to approximately $3.45 billion. The ratio, which compares derivatives open interest against XRP reserves on the exchange, suggests a build-up of leveraged long bets relative to actual coins held. This re-risking follows a period of deleveraging, with the current reading marking the first meaningful increase in leveraged exposure this year. The spike in leverage coincided with a substantial increase in futures volume, which surpassed spot market trading. Binance's recent decision to increase maximum leverage on XRP from 5x to 10x is seen as a contributing factor to this trend. The rally that preceded this leverage build-up was partly attributed to the U.S. Treasury's expanded bond-buyback program, which lowered long-term yields and boosted Bitcoin, with XRP outperforming many major tokens. Institutional demand, evidenced by increased XRP ETF holdings from Goldman Sachs and Bank of America, also provided underlying support. Fundamental developments include Ripple backing a new institutional credit fund utilizing its RLUSD stablecoin on the XRP Ledger and its efforts to expand payment services in Korea. Analysts suggest that continued price and open interest growth alongside elevated leverage could signal fresh capital entering the trend, potentially pushing XRP towards $1.50 and higher. However, if the leverage ratio remains high while the price declines, crowded longs could face forced liquidations, leading to a sharp sell-off.