XRP demand weakened across three fronts in early July as on-chain activity, futures positioning, and spot ETF flows all cooled.

However, extreme bearish funding rates have drawn the attention of analysts, who read such conditions as a possible setup for a rebound.

3 Signs Point to Cooling XRP Demand

On-chain activity on the XRP Ledger has slid in July. Santiment recorded 25,350 active wallets, the second-lowest daily reading of 2026. In addition, new wallet creation fell to 2,130, the weakest level since November 2024.

“After late-June dip-buying excitement, this looks like traders are waiting for a real catalyst instead of chasing another small bounce,” the firm said.

Derivatives told a similar story. XRP futures open interest on Binance dropped to roughly 397 million XRP. This marked the metric’s lowest level in over three months. 

A falling reading during price weakness usually indicates that traders are trimming leveraged exposure. 

“Although a decline in open interest is not necessarily a definitive bearish signal, it does point to reduced trader participation in the derivatives market. In many cases, this phase represents a period of repositioning as investors await a clearer market direction,” an analyst wrote.

Institutional demand has cooled, too. US spot XRP ETFs posted a $7.29 million net outflow on July 8. That marked their largest single-day withdrawal since March.

The weekly picture turned as well. Bitcoin and Ethereum ETF flows swung positive in the week ending July 10, per SoSoValue. XRP went the other way, posting a red week that broke a 9-week inflow streak.

Why an XRP Reversal May Be Near

Despite the bearish signs, analyst Darkfost flagged a contrarian angle. XRP funding rates on Binance, aggregated over 30 days, have reached extreme negative levels after the token fell about 70% from its July 2025 high.

Such one-sided pessimism often precedes a turn. Darkfost noted a comparable setup in April 2025 near $1.25, which was followed by a 126% rally.

“When such a strong consensus forms, especially after a correction on the order of 70%, it is often a sign that a potential reversal may be developing over the medium term,” the analyst stated.

Santiment sees potential catalysts beyond price. Growth in RLUSD, tokenized assets, payment use cases, EVM sidechain expansion, and on-chain lending could pull users back if any of these narratives gain traction.

For now, spot flows rather than leverage may steer XRP’s price. The next decisive move likely depends on whether one of those catalysts revives on-chain activity.

Source: BeInCrypto