XRP's Open Interest Divergence and Market Sentiment: A Roadmap for Reversal Points

The XRP market in 2025 has been a masterclass in the interplay between institutional adoption, open interest dynamics, and price action. With the launch of multiple spot XRP ETFs-including the Bitwise XRP ETF, 21Shares XRP ETF (TOXR), and the record-breaking Canary Capital XRPC ETF-the asset has entered a new phase of mainstream acceptance. However, beneath the surface of these regulatory milestones lies a critical question: How can open interest divergence help investors identify potential reversal points in XRP's price cycle?

The ETF Catalyst: Liquidity, Inflows, and Open Interest

The approval of spot XRP ETFs by the SEC and their subsequent listings on exchanges like NYSE Arca have fundamentally altered XRP's market structure. For instance, the Canary Capital XRPC ETF attracted $250 million in first-day inflows and recorded $58.6 million in trading volume on November 13, 2025. These inflows, driven by both institutional and retail demand, have tightened XRP's float and increased on-chain activity.

Crucially, these ETFs operate on an in-kind creation and redemption model, allowing direct swaps between ETF shares and XRP tokens. This mechanism bypasses traditional trading volume metrics, creating a more efficient flow of capital into the asset. As a result, open interest in XRP futures has surged, with cumulative net inflows into XRP ETFs reaching $422.66 million in the first week post-launch according to CoinEdition.

Open Interest Divergence: A Historical Case Study

One of the most compelling examples of open interest divergence occurred in May 2025, when XRP's open interest fell to levels last seen during the same period, despite the price being at $2.50-a 40% increase from the previous year's low according to BeInCrypto. This divergence typically signals a shift in market sentiment, as speculative and leveraged positions are unwound, leaving stronger hands to dictate price direction.

After the open interest bottomed in May 2025, trading volume spiked, propelling XRP to $3.50 within weeks according to BeInCrypto. A similar pattern is emerging in late 2025, with open interest dipping to one-year lows in October 2025. Analysts now watch for a repeat of this bullish reversal, particularly as XRP consolidates within a descending triangle pattern, with key resistance at $2.96 and support near $2.70.

Price Reversal Signals: Metrics and Technical Indicators

The correlation between open interest and price reversals becomes even clearer when paired with technical indicators. For example, the TD Sequential indicator has historically signaled buy opportunities for XRP, with rebounds of 14% and 18% following similar signals in the past according to CoinEdition. Additionally, a 25% increase in open interest over several days could confirm a new upward trend, with potential price targets extending to $4.20–$4.50 according to BeInCrypto.

However, bearish risks remain. A drop in open interest below $1.4 billion (a six-month low) in November 2025 coincided with XRP's price falling below $2.00, signaling diminished bullish conviction. This highlights the importance of monitoring both open interest and on-chain metrics, such as exchange withdrawals and whale activity, to gauge market sentiment according to CoinEdition.

Institutional Confidence and the Path Forward

The institutional wave shows no signs of slowing. Franklin Templeton, Grayscale, and Bitwise have all launched XRP ETFs, with the latter waiving its 0.34% management fee for the first $500 million in assets according to CoinEdition. These moves, coupled with $245 million in inflows into the Canary Capital ETF, suggest continued bullish sentiment.

Yet, caution is warranted. The XRP Fear & Greed Index has shown divergence from price action, with sentiment dipping into "fear" territory as prices rise-a pattern observed before major peaks in 2020–2021. Additionally, October has historically been a weak month for XRP, with negative returns in seven of the past 12 Octobers.

Conclusion: A Strategic Outlook for 2025

For investors, the key takeaway is clear: Open interest divergence acts as a leading indicator for XRP price reversals, particularly when paired with ETF-driven liquidity and technical patterns. While the asset faces short-term volatility, the long-term fundamentals-driven by ETF adoption, regulatory clarity, and institutional demand-remain robust.

As XRP approaches critical support levels ($2.20–$2.40) and resistance ($2.80–$3.00), traders should closely monitor open interest trends. A sustained increase of 25% could confirm a bullish breakout, while a drop below $2.75 may trigger further consolidation. In this dynamic market, the interplay between open interest and price action will remain a critical tool for navigating XRP's next chapter.