[Digital Today reporter Yoonseo Lee] XRP has reduced market instability by flushing out much of the excessive leverage during a sharp drop in late June. But analysts say whether the rebound can be sustained ultimately depends on whether exchange-traded funds (ETFs) and spot buying can support it.

On July 8, blockchain outlet CryptoSlate reported that the key variable in the XRP market is not easing liquidation pressure but an inflow of new real demand.

XRP traded around $1.08, up about 2.7 percent over the past seven days, and its market capitalisation was estimated at about $67 billion. But the structure of trading still shows a larger share in derivatives than in spot. Coinglass data showed 24-hour spot trading volume of about $402 million and futures volume of about $2.25 billion. Open interest was about $2.35 billion, and daily liquidations were about $8.3 million.

The rebound follows a market reset in late June. XRP fell as low as $1.02 at the time. Long liquidations accelerated and futures activity also eased. Realised losses fell to the weakest level since 2022. The market can stabilise once selling pressure is exhausted, but new buyers ultimately need to enter for an uptrend to continue.

A fall in open interest was also cited as having two sides. Coinglass explained that a decline in open interest can reflect forced liquidations, voluntary exits and reduced exposure due to higher volatility. When XRP fell to around $1.07 in late June, about $9 million in long liquidations occurred and open interest dropped to about $2.34 billion.

Speculative pressure clearly eased in the process. Over the same period, futures trading value fell from more than $30 billion a year earlier to about $2.84 billion. With leveraged long positions reduced, the risk of cascading liquidations recurring on a small rebound has fallen. But if traders lost conviction and stopped expanding positions, the current rebound could amount to temporary relief driven by the absence of forced selling.

That is why the market is watching spot investors and ETF money as alternative sources of demand. Current figures send balanced signals. Spot trading is at a meaningful level, but the visible centre of XRP trading remains futures. Even if liquidation issues have eased somewhat, open interest remains large, leaving room for leverage-driven trading to expand again.

ETF flows are positive, but the size remains limited. From June 22 to 26, about $1.79 billion flowed out of bitcoin spot ETFs and about $273.5 million flowed out of ether spot ETFs. Over the same period, $22.99 million flowed into XRP spot ETFs. The fact that money moved into XRP products even as funds left major ETF groups is meaningful in terms of direction.

But the absolute size is still small. The $22.99 million inflow into XRP is hard to see as enough to change market flows compared with the combined outflow of about $2.06 billion from bitcoin and ether ETFs. A CoinShares fund flows report as of June 1 showed $1.67 billion flowed out of digital asset investment products overall, including $1.438 billion from bitcoin and $257 million from ether. XRP was one of the few altcoins to record an inflow, at $20.3 million.

ETF demand is drawing attention because it differs in nature from futures. Franklin's S-1 filing for an XRP spot ETF states the fund is a passive product that tracks the price of XRP before fees and does not use leverage or derivatives. XRPZ is designed as a grantor trust structure that directly holds XRP, with total net assets of $230.71 million as of June 7. Grayscale's GXRP also said the fund passively invests only in XRP.

The market also noted that net creations matter more than assets under management. Assets under management can rise through price gains, initial inventory or trading of ETF shares among investors, but net creations represent flows that require actual new XRP purchases. For ETF money to serve as the main support for prices, such net creations would need to continue multiple times.

Ultimately, the next leg of gains in XRP depends on who becomes the buyer. Even if prices rise, the rebound could lose credibility if the share of futures trading grows again and open interest increases faster than spot demand. Conversely, if ETF inflows continue, spot trading improves and custody balances show actual XRP accumulation, the rebound is more likely to proceed on a more stable buying base.

For now, the market structure is more orderly than during the turmoil in late June. But whether XRP moves beyond a technical rebound driven by fewer forced liquidations depends on whether ETFs and spot buying show stronger support than futures-centred trading.