XRP Faces Challenges Despite Bullish Events in 2025

The cryptocurrency space has always been a fluctuating landscape, and as of 2025, XRP (XRP) finds itself navigating tricky waters. Recent developments, including its candidacy for the United States’ “Digital Asset Reserve” and a settlement between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), have generated excitement. Yet, despite these accomplishments, XRP has been underperforming compared to the broader cryptocurrency market.

On March 6, XRP was highlighted as a candidate for the Digital Asset Reserve, and on May 8, Ripple Labs concluded a years-long complaint with the SEC, boosting optimism around the token. However, in the three months leading up to the significant date of May 22, XRP saw a 6% decline, while the overall crypto market capitalization surged by 10%. Despite this, traders remain bullish, anticipating a potential rally of 45% to $3.50.

Increasing Interest from Traders

One of the key indicators of rising confidence in XRP is the increase in open interest on major exchanges. As of May 22, the aggregate open interest on XRP futures has risen to 923 million XRP, marking a 31% increase in just two weeks. This $2.2 billion position in the futures markets indicates heightened interest among traders, although one should approach this with caution, as futures instruments can also be used to bet against the price.

Notably, some analysts argue that this surge in leveraged positions reflects growing institutional interest in XRP. Following multiple submissions for a spot XRP exchange-traded fund (ETF) listing in the U.S., traders are optimistic about the potential outcomes. The final decision from the SEC is expected in October, adding increased anticipation to the market.

Leveraged Positions and Market Sentiment

Demand for bullish leveraged positions in XRP has resulted in a positive funding rate. In neutral market conditions, it’s typical to see a 7% to 14% annualized funding rate; however, during periods of fear of missing out (FOMO), this can surpass 50%. As of May 22, the annualized funding rate reached 19%, approaching highs not seen in six months.

This optimism, although not at the extreme levels observed back in December 2024—when the rate was at 100% following a considerable rally—still suggests that there’s room for bullish activity in the XRP futures market. With the right catalysts, XRP may respond positively, as seen in past experiences after announcements of partnerships and regulatory clarifications.

Regulatory Developments and Future Partnerships

Another significant factor impacting XRP’s price potential is the regulatory landscape surrounding it. Recently, U.S. Senator Cynthia Lummis, the chair of the Senate Banking Subcommittee on Digital Assets, has faced pushback regarding her willingness to meet with Ripple officials. Ripple CEO Brad Garlinghouse publicly urged Lummis on May 19 to reconsider her stance, emphasizing the need for leadership in the crypto sector to promote the U.S. as the global hub for cryptocurrency innovation.

Having settled major regulatory challenges, Ripple Labs is now in a better position to pursue new partnerships and acquisitions. Historically, the announcement of such initiatives has led to favorable price movements for XRP, and the current open interest in futures could provide the necessary momentum to push XRP prices above their all-time high of $3.25.

Conclusion

Despite the hopeful developments and the structural backing emerging from regulatory advancements, XRP’s journey remains a complex one filled with challenges. The market’s behavior, particularly in relation to leveraged positions and institutional interest, will play a vital role in its future.

With a landscape that is constantly shifting, both traders and investors will need to stay attuned to the developments in the crypto regulatory environment and market dynamics as they aim for gains in the coming months. As of 2025, while optimism thrives around XRP, caution and strategic thinking will remain essential in navigating this volatile market.

For a deeper dive into cryptocurrency investments, explore our coverage on which senators invest in crypto and stay informed on the latest in the crypto world through our regular updates on Ripple Labs and XRP’s market trends.

This article is for general information purposes and does not serve as investment advice. The opinions expressed here are the author’s alone and do not necessarily reflect the views of Cointelegraph.