Despite two landmark developments in 2025—Ripple Labs settling its case with the SEC and XRP being shortlisted for the U.S. Digital Asset Reserve—XRP continues to underperform the broader crypto market, frustrating investors who anticipated a significant price rally.
XRP Price Down Despite Regulatory Milestones
On March 6, XRP was named a candidate for the United States' “Digital Asset Reserve”, and on May 8, Ripple Labs ended its prolonged legal battle with the U.S. Securities and Exchange Commission (SEC). These events were seen as monumental wins for XRP and the wider crypto community.
Yet, XRP has declined 6% over the past three months, even as total crypto market capitalization rose by 10%. Traders and analysts had expected a breakout, with many still targeting a 45% rally to $3.50, but the coin remains stagnant.
Futures Data Shows Increased Leverage and Speculation
According to derivatives data, open interest in XRP futures has jumped to 923 million XRP, representing a 31% increase over two weeks. This translates to $2.2 billion in open positions. While this shows growing interest, it doesn’t necessarily imply bullish sentiment since futures can also be used to short the asset.
Notably, funding rates surged to 19% annualized on May 22, nearing their highest level in six months. Although this reflects optimism, it still falls short of the 100% spike in December 2024, when XRP rallied from $1.33 to $2.90 within a week.
Traders believe this rising interest could be driven by speculation surrounding a possible spot XRP ETF, with multiple issuers already filing applications. The SEC’s final decision on this matter is expected by October 2025.
Politics and Regulation Still a Mixed Bag
While Ripple Labs is no longer entangled in legal battles, political challenges remain. Ripple CEO Brad Garlinghouse recently called on U.S. Senator Cynthia Lummis, chair of the Senate Banking Subcommittee on Digital Assets, to engage with the company. Lummis has so far declined, adding uncertainty to XRP's regulatory narrative.
However, favorable regulation could unlock new strategic opportunities. Without the cloud of regulatory threats, Ripple is now positioned for partnerships, acquisitions, and institutional integrations, all of which could catalyze future price appreciation.
What’s Holding XRP Back?
The disconnect between XRP’s promising fundamentals and its price action is puzzling. Historically, XRP has surged following positive announcements. With $2.2 billion in leveraged positions and regulatory clarity, the conditions seem ideal for a breakout.
Still, analysts suggest that a lack of immediate institutional momentum, lingering political resistance, and overall market focus on other assets may be delaying XRP’s rally.
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