XRP has risen 10% since early December, mirroring broader market gains, but several factors threaten to undermine this recovery. Rising network velocity, surging short positions, and potential sales from Korean investors pose risks. Meanwhile, positive ETF inflows provide some support.
XRP's price has climbed 10% at the start of December, in line with a general market uptick. However, analysts warn that this rebound may falter due to emerging headwinds. CryptoQuant data indicates a sharp increase in XRP Ledger Velocity, hitting the year's peak. This metric tracks how often XRP is transferred on the network, signaling rapid trading rather than long-term holding in cold wallets. As CryptoOnchain from CryptoQuant notes, such surges point to high liquidity and trader involvement, potentially including large whale transactions. While neutral on its own, this velocity spike heightens vulnerability to price swings, where any adverse event could reverse gains.
Compounding concerns are rising short positions in the derivatives market, fostering heavy selling pressure. Funding rates have stayed mostly negative, reflecting bearish trader sentiment and dominance of shorts. Historical patterns support caution: in April, deeply negative rates preceded XRP's drop below $2. Analyst PelinayPA observes, “As more traders pile into shorts in the derivatives market, the continuation of the trend becomes more likely, since the persistent short pressure keeps the appetite for opening long positions low. Under these conditions, the probability of price retesting the $2.0–$1.9 zone increases.” This early-month bounce lacks the strength to counter the downtrend ongoing since July.
Korean investor activity adds another layer of risk. Upbit holds 6.18 billion XRP, far exceeding Binance's 2.6 billion, underscoring Korea's market sway. Reserves on Upbit have grown steadily over three months, reaching 2025 highs, which could trigger sales and amplify downside alongside derivatives bearishness and velocity trends.
Offsetting these pressures, XRP exchange-traded funds (ETFs) show resilience with positive net inflows over three consecutive weeks. Vanguard's decision to lift its long-standing crypto ban will permit XRP ETF trading this month, potentially bolstering demand.