XRP is currently experiencing a notable shift in its estimated use ratio, reminiscent of conditions leading up to a sharp increase in late 2024. Recent data indicates that speculative trading has cooled down significantly, with Binance's estimated use ratio (ELR) dipping to 0.16, marking one of the lowest levels since November 2024.
For those less familiar, the estimated use ratio compares open interest to exchange reserves, revealing the extent to which traders are utilizing use. Currently, this ratio is hovering near the April 2026 low of 0.15, which was observed during a previous price correction for XRP. Following a peak of $3.6 in 2025, XRP has fallen nearly 70% and is trading around $1.10.
Understanding the Implications of Lower use
This decline in use mainly signals a decrease in leveraged futures positions rather than changes in spot holdings. As the market underwent correction, many leveraged trades were unwound, leading to a fall in open interest. Currently, Binance's XRP open interest sits at approximately $375 million, down from the highs recorded over the past year.
Lower use often results in a healthier market environment. High use increases the risk of forced liquidations, where one liquidation can trigger a series of others, causing wild price fluctuations. As use decreases, the risks associated with these liquidations diminish, contributing to market stability and providing a more solid foundation for future price movements.
Currently, the derivatives market suggests a significant reduction in speculative trading, indicating a less overheated market compared to previous months.
Current Market Trends Mirror 2024
The present market environment shares striking similarities with the situation before XRP's late-2024 surge. In mid-2024, XRP was trading around $0.40 while the estimated use ratio gradually fell to approximately 0.05, marking the cycle's lowest point. During this period, the price remained relatively stable for months, allowing the derivatives market to reset quietly before buying momentum picked up.
This reset eventually led to a dramatic rally, with XRP climbing over 790% to exceed $3.6 as use climbed in tandem with the price. If XRP were to replicate a similar percentage increase from its current level of about $1.10, it could theoretically reach around $9.80. However, it's crucial to note that this figure is purely mathematical and should not be interpreted as an actual price prediction.
Institutional forecasts, however, are more conservative. Recently, Standard Chartered has revised its year-end 2026 target for XRP from $8 down to $2.8, though it maintains a 2030 forecast of $28.
Adding to the bullish sentiment, whale activity on-chain shows increased confidence among large investors. Wallets holding between 100 million and 1 billion XRP have accumulated about 1.3 billion XRP recently, indicating strong interest.
This material is informational and not financial advice.
