XRP Drops 22%, but $184M in Derivatives Bets Raise Hope

While the XRP price collapsed, market data shows that traders increased their derivatives bets on Binance, the world’s largest crypto exchange.

XRP faced a sudden sell-off this week after two consecutive US inflation reports unsettled financial markets. The cryptocurrency had reached a recent high of $1.65 on Sept. 23 and stayed near that level for almost two weeks before economic data triggered a downturn. 

The U.S. Consumer Price Index (CPI) report came in above expectations, putting pressure on risk assets. The following day’s Producer Price Index (PPI) report added to market concerns, and a weak opening for U.S. stock markets further weighed on cryptocurrency prices.

As selling continued, XRP fell as much as 22.5% from its September high, dropping below $1.30. However, some derivatives traders saw the decline as a chance to buy at lower prices. This response drove more than $184 million in XRP buying activity on Binance.

XRP Decline Triggers Derivatives Bets

A 22% drop within a few days can make investors cautious, especially when economic data continues to weigh on market sentiment. 

However, some aggressive derivatives traders took the opposite approach as XRP fell below $1.30. They saw the steep decline as a possible buying opportunity, betting that the price could recover after the sell-off.

The increase in buying activity appeared in Taker Buy Volume, an indicator that measures the volume of market buy orders in derivatives trading. The metric rose within hours of XRP’s decline, showing that some traders were willing to buy as the broader market continued to fall.

Binance recorded more than $73 million in XRP buy volume in a single hour. By comparison, Bybit recorded approximately $1 million, while OKX saw just $451,000 during the same period. 

Binance also recorded several other hourly periods with buying volume above $35 million that day. In total, traders generated more than $184 million in XRP buying activity on Binance as they bet against the downward trend.

XRP Futures Trading Hits a Six-Month High

The increase in buying activity came after a busy September for XRP’s derivatives market. Futures trading volume across Binance, Bybit, and OKX reached $56.18 billion during the month, marking a six-month high. 

Binance led the market with $32.36 billion in trading volume, followed by Bybit with $12.5 billion and OKX with $11.32 billion. The high trading volume showed strong market participation as XRP approached and held its September price highs. 

However, the increased activity also meant that traders had built up significant positions, leaving the market exposed to sharp changes when economic conditions worsened.

At the start of October, open interest in XRP perpetual futures on Binance stood at approximately $485 million. This was below the yearly peak of nearly $600 million recorded in late September. 

When the unfavorable CPI and PPI reports triggered a market decline, liquidations and position closures pushed open interest lower across exchanges.

XRP Rebounds 4% But Recovery Prospects Remain Unclear

The decision to buy the dip has produced some early gains. By Friday morning, XRP had recovered approximately 4.5% from its lows to trade at $1.34, giving traders who bought near the bottom an initial return. 

Such rebounds can occur after sharp sell-offs driven by economic news. However, a price rebound after a steep decline does not necessarily mean that the broader downtrend has ended. XRP still faces the economic pressures that contributed to its recent losses.

For instance, the Federal Reserve’s interest rate policy remains another concern for the cryptocurrency market. On Sept. 16, the central bank raised its benchmark interest rate to a range of 3.75% to 4%. Traders already expect another increase at the Oct. 27-28 Fed meeting.