XRP futures open interest has dropped to its lowest level in 2025, suggesting that traders are unwinding leveraged positions. While this does not mean that bearish sentiment is widespread, it does raise concerns that XRP’s recent bullish momentum is waning.

Open Interest Declines, Signals Market Caution

According to data from CoinGlass, the total number of XRP futures contracts open now stands at $1.33 billion, down 8% from last week. This could reflect traders’ caution in the face of market volatility.

To gauge whether investors are losing interest in XRP, the perpetual contract funding rate is considered a key indicator. When the funding rate is positive, it indicates that long positions are dominant, reflecting bullish market sentiment. Conversely, a negative funding rate can signal a bearish trend.

Since December 9, XRP’s eight-hour funding rate has remained near zero, indicating a balance between leveraged buy and sell demand. This is in contrast to the sharp rally on December 4, 2024, when XRP surged 140% and the funding rate indicated a surge in long positions. However, the market subsequently corrected 22% in just three days.

XRP’s most recent rally occurred between February 12 and February 15, when the price increased 17% from $2.41 to $2.83. However, the data shows no significant increase in leveraged buying activity, which could indicate caution among traders or capital allocation to other cryptocurrencies.

Factors Affecting XRP Price Trend

One of the key factors affecting XRP's outlook is the long-running legal battle between Ripple and the US Securities and Exchange Commission (SEC). Although the SEC has dismissed several lawsuits involving platforms such as Coinbase, OpenSea, Robinhood, and Uniswap, Ripple remains an exception. If Ripple reaches a favorable settlement, this could provide a strong bullish momentum for XRP.

Additionally, Ripple's XRP promotion strategy has also encountered obstacles as CEO Brad Garlinghouse failed to convince the US government to establish a Strategic Digital Asset Reserve to diversify beyond Bitcoin. Meanwhile, Pierre Rochard, VP of research at Riot Platforms, said that the Trump administration is no longer considering the creation of a dedicated cryptocurrency board, reducing the possibility of XRP being backed by the government.

XRP Key Price Levels

XRP is currently trading at $2.19, down more than 4% from yesterday. From February 23 to February 26, the price plummeted by 16.8%, resulting in the liquidation of $79 million in long leveraged futures contracts.

According to analysts, for XRP to turn bullish, the token needs to break above $2.22 and stay above it. If buying pressure increases, XRP could head towards $2.25 – the next resistance level. If the price breaks above $2.30, this could mark a change in momentum and pave the way for XRP to retest the key price zones between $2.35 and $2.40.

In a volatile market, investors need to keep a close eye on both technical factors and macro news that could influence XRP’s trend in the near term.