More than $610 million of long positions were forcibly liquidated in XRP derivatives markets in a single day, setting a record for daily liquidations. Bullish bets concentrated on a price rebound that has continued since September, but as the price turned lower, excessive leverage built up in the market led to cascading liquidations, an analysis said. Positive signals also emerged, including inflows into exchange-traded funds (ETFs), but another view is that caution is needed on volatility as bullish bets in the futures market are increasing again.

Decrypto, a blockchain media outlet, reported on Oct. 13 local time that XRP recorded more than $610 million in long-position liquidations on major exchanges including Binance, OKX and Bybit on Oct. 11. It was the largest single one-day liquidation in XRP’s tracked history.

The incident is seen as a case in which the leverage risk that grew during XRP’s rebound surfaced all at once. XRP extended its recovery through September and early October and approached the $1.55 to $1.60 range. As prices rose, futures open interest also increased, expanding leveraged bets by traders expecting further gains.

Open interest refers to the total size of futures contracts that have not yet been liquidated or reached maturity. Rising open interest signals increased market participation and position-building, but if bets on price direction become one-sided, liquidation risk can also grow when sharp volatility occurs.

In mid-August, when XRP prices were weak, open interest in the derivatives market fell to around $360 million. As prices rebounded in September, open interest rose to around $620 million. Binance’s 30-day average XRP open interest was also tallied at $511 million, the highest in eight months.

The problem was that leveraged positions accumulated quickly while expectations of further price rises grew. As XRP prices fell, long positions that failed to meet margin requirements were forcibly liquidated. Selling generated during the liquidation process may have added downward pressure. A vicious cycle formed in which price declines triggered more liquidations, leading to large-scale position unwinds.

XRP is currently trading around $1.37, below the $1.55 to $1.60 range seen during the rebound. The notional value of XRP open interest on Binance fell to $467 million from a recent peak, but it rose 2.48 percent over the past 24 hours. That shows some traders are rebuilding positions even after the large liquidations.

Still, a renewed rise in positions in the futures market does not immediately mean a price rebound. Funding rates on perpetual futures remained positive, keeping long positions dominant, but XRP prices failed to regain a clear upward trend. Money is flowing into bullish bets, but it is uncertain whether spot buying is strong enough to lift prices.

Some positive moves also appeared in the spot market. SoSoValue data showed XRP ETFs saw net inflows of $11.31 million in the week ending Oct. 9. Unlike leveraged bets in the futures market, ETF inflows can be interpreted as an indicator of spot-based investment demand. Still, it is difficult to conclude that a trend of buying has formed based only on net inflows in a single week.

The direction of XRP prices will depend on how quickly leveraged positions build up again after the liquidations and whether spot buying can support it. If traders aggressively increase long positions again and prices fall further, forced liquidations could be repeated. If spot demand flows in steadily and selling pressure eases, prices could also try to reclaim the $1.60 level.

The episode shows how much leverage in the derivatives market expanded during XRP’s rebound. With bullish bets rising again even after record liquidations, changes in open interest and funding rates, as well as whether prices recover, are expected to be key indicators for gauging the market’s next moves.