Crypto analytics firm CryptoQuant highlights a growing divergence between XRP’s price and its Estimated Leverage Ratio (ELR) on Binance, suggesting the fourth-largest cryptocurrency could be poised for a sharp, squeeze-driven rally. After months of downside pressure through much of the past 6–7 months, the derivatives picture shows “potential energy” building beneath a calm surface.
The ELR — calculated as open interest divided by an exchange’s coin reserves — gauges average leverage used by traders relative to available reserves. Higher ELR values indicate heavier speculative borrowing. According to CryptoQuant, XRP’s ELR plunged to about 0.13 in Q4 2025 after a sizeable dump, but has since begun rising even as spot price remains rangebound between roughly $1.30 and $1.50.
This widening divergence between a creeping ELR and a stable spot price creates an unstable setup that historically resolves in sharp directional moves rather than gradual trends. XRP has traded in a tight band for the last six months, and the increasing leverage exposure suggests the market may be primed for a major swing.
Supporting factors for an upward breakout include improving regulatory clarity following the SEC resolution, continued developments within the Ripple ecosystem, expansion of the RLUSD stablecoin, and growing institutional interest such as potential ETFs. Long-term holders appear relatively steadfast near current levels, limiting downside supply while leverage traders are beginning to roll bets back on.
The immediate technical hurdle is resistance around $1.50; any sustained bullish move must overcome this level. Conversely, a risk-averse macro environment or delayed catalysts could prolong sideways action despite rising ELR—crypto markets remain unpredictable and volatile. While a higher ELR can reduce the odds of a dramatic downside, it does not guarantee a satisfying bullish outcome for traders.