Two Reasons Why XRP Could See a Sharp Drop Soon

Interest in XRP is cooling off, with key on-chain metrics signaling potential short-term weakness ahead.

With waning bullish sentiment across the broader market, these factors suggest a likely deeper price decline for XRP in the coming trading sessions.

XRP Traders Are Tapping Out: $222 Million Exit Signals Fear

XRP’s falling Estimated Leverage Ratio (ELR) on leading exchange Binance confirms falling investor confidence and a declining appetite for risk. According to CryptoQuant, the ELR currently sits at 0.36 — its lowest weekly close in the past month.

XRP Estimated Leverage Ratio. Source: CryptoQuant

An asset’s ELR measures the average amount of leverage its traders use to execute trades on a cryptocurrency exchange. It is calculated by dividing the asset’s open interest by the exchange’s reserve for that currency. 

XRP’s declining ELR indicates a reduced risk appetite among traders. It suggests that investors are growing cautious about the token’s short-term prospects and are avoiding high-leverage positions that could amplify potential losses.

The trend is no different among spot market participants. According to Coinglass data, XRP has recorded negative netflows exceeding $222 million since July 29, signaling persistent sell-side dominance and weak buy-side pressure. 

XRP Spot Netflow. Source: Coinglass

When an asset records negative spot netflows, traders are selling their holdings and taking profits, while fewer buyers are stepping in to replace them. 

This trend could worsen XRP’s current downtrend, as the demand for the asset decreases while its supply builds up.

XRP Bears Close In on $2.71—But a $3.39 Breakout Is Still in Sight

As sell-side pressure gains, XRP risks plunging to $2.71. If this support floor fails to hold, the altcoin could witness a steeper fall to $2.50.

XRP Price Analysis. Source: TradingView

On the other hand, a breakout above the $3 price level remains possible if buying momentum strengthens. A successful move past this threshold could pave the way for a rally toward $3.39.