XRP has seen stronger spot buying on Binance, while leverage in the derivatives market continued to shrink.

On July 11, blockchain outlet The Crypto Basic reported that CryptoQuant analysts assessed that this combination has often appeared in the past ahead of funding-rate readjustment phases.

The key is that spot and derivatives flows are diverging. CryptoQuant analyst CryptoOnchain pointed to a clear rise in XRP spot trading on Binance from July 4 to July 8. In particular, inflows on July 7 totaled 64.9 million XRP, exceeding outflows of 49.2 million XRP. That suggests funds are moving into the spot market while leveraged positions continue to be unwound.

The derivatives market, by contrast, was weak. Binance XRP open interest topped $500 million in mid-June, then fell to $431 million on July 4 and slid to $399 million on July 10. Over the same period, long liquidations surged 94 percent from the previous week and stood 172 percent above the recent three-month average. Short liquidations fell 53 percent.

Funding-rate moves were cited as another signal. Binance's XRP funding rate briefly turned negative in late June and then recovered, rising 266 percent on a weekly basis to 0.007. CryptoOnchain said the combination of a rising funding rate, falling open interest and large long liquidations shows new long entrants are paying higher costs while overall market leverage is declining.

On-chain indicators were relatively more stable than the derivatives market. The number of active addresses was 11 percent below the recent three-month average, meaning network activity had not fully recovered. Transaction volume rose about 3 to 4 percent on both one-week and one-month measures, but remained 21 percent below the three-month average. The network value to transactions ratio (NVT) also fell, showing signs that network use is stabilising.

CryptoOnchain described the current setup as a phase where a rising funding rate, falling open interest and large long liquidations overlap. He said this combination has often led to funding-rate readjustments in the past. Whether the same pattern repeats this time depends on how traders respond to the gap between stronger funding rates and weaker leverage participation, he said.

Some have also said bearish sentiment has already reached an extreme. CryptoQuant analyst Darkpost said the XRP derivatives market hit extreme bearish levels after a sharp drop, and Binance funding rates have also turned deeply negative in the past. He mentioned that excessive short positioning can act as a contrarian signal, citing an instance in April 2025 when XRP rose 126 percent after similar conditions.

Darkpost cautioned that past patterns do not guarantee future outcomes. Still, he viewed the combination of a steep correction and extreme bearish sentiment as something that could raise the likelihood of a medium-term recovery. The next point to watch in the XRP market will be whether continued spot buying, alongside falling derivatives open interest and a rebound in funding rates, translates into an actual price reversal.