XRP Rally Fueled by Leverage as Spot Demand Remains Muted

XRP has seen a significant price surge over the past week, rising by around 53% to $1.520 on August 23.

This rally was largely driven by short covering and leverage in the derivatives market rather than spot demand.

CryptoQuant contributor CryptoOnchain noted that Binance's average XRP short liquidations over the past week reached $7.31 million, a six-month high, with the estimated leverage ratio (ELR) also reaching 0.213, its highest in six months.

The spot market showed little change, with Binance's XRP reserves remaining relatively stable at 2.62 billion tokens.

CryptoOnchain warned that if spot demand does not follow the current price rally, XRP may remain range-bound or face large liquidations in both directions as leverage unwinds.