XRP has shown a deleveraging signal that preceded a 72% rally before, according to Cryptoquant analyst Darkfost. Binance futures exposure has shrunk, which could ease pressure and set up a short-term rebound.
Binance XRP open interest fell nearly 28% since Sept. 22, a pattern that Cryptoquant contributor Darkfost says matches setups before earlier gains. He reported the findings on Oct. 27.
Open interest drops below its 180-day average
The analyst put Binance XRP open interest at approximately $445 million, below its 180-day average of roughly $460 million. Over the same period, XRP's price declined 17%. XRP traded at $1.31 on Oct. 28, one day after the analysis appeared.
Darkfost called the move "a rather positive signal" because it suggests pressure on XRP futures is gradually easing. However, part of the drop reflects valuation: a lower XRP price cuts the dollar value of existing positions even before any are closed.
Liquidations contributed to the contraction
The analysis also attributed some of the reduction to liquidations during the sell-off, when losing positions were forcibly closed. Losses on perpetual futures contracts can intensify in a sell-off, raising the risk of forced closures as collateral becomes insufficient.
CME Group states that a decline in outstanding futures positions can indicate a prevailing price trend is losing strength.
Past episodes preceded gains of 32% and 72%
Darkfost tied the latest deleveraging to earlier rebounds. XRP gained 32% in the period after the mid-September episode, he said, while the mid-August episode was followed by a 72% rally.
He wrote that when this happens, it tends to stabilize the asset and helps put in place some of the conditions that favor a potential short-term rebound. The signal rests on dollar-denominated open interest data.
Source: Bitcoin News
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