XRP Drops Below Weekly Low as Fed Decision Nears, Derivatives Signal Weakness

• XRP drops below weekly low as Fed rate hike expectations build market pressure. 
• Open interest falls 8.60%, signaling traders are closing positions to reduce risk.
• Fair Value Gap at $1.19–$1.22 emerges as key downside liquidity zone. 

XRP started the week on solid footing, but pressure has built steadily as the Fed’s rate decision approaches. Markets are pricing in a hike, from the current 3.50–3.75% range to 3.75–4.00%, driven by hotter-than-expected PPI and CPI readings and rising oil prices tied to the ongoing conflict in the Middle East. 

The CLARITY Act, crypto’s market structure bill, added to the pressure. The Senate fell short of the 60 votes needed to advance it Tuesday, a setback Ripple CEO Brad Garlinghouse called “this one stings.” 

Together, this pushed XRP below its weekly low, with the token now trading near $1.27 at press time, just above a Fair Value Gap between roughly $1.19 and $1.22, a zone of thin trading left behind during the sharp rally that briefly took XRP toward $1.70.

What the Derivatives Data Shows

XRP’s derivatives market has seen a notable shift in activity. Trading volume across derivatives jumped 41.79% to $7.84 billion, a sharp pickup that reflects traders actively repositioning ahead of the Fed decision. At the same time, open interest, the total value of contracts still open across the market, fell 8.60% to $2.86 billion, meaning more positions are being closed than opened, consistent with traders de-risking ahead of a binary macro event rather than building fresh exposure into it.

Options activity tells a mixed story: volume dropped 21.51% to $10.58 million, while open interest rose 3.53% to $94.12 million, suggesting traders are holding existing positions even as new activity slows. 

What the OI-Weighted Funding Rate Shows

The OI-weighted funding rate tracks the periodic payments traders exchange to keep perpetual futures prices aligned with spot. It averages funding across exchanges and weights them by open interest, offering a broader market view. 

XRP’s funding rate ran strongly positive through most of August, spiking to nearly 0.02% around August 22, a clear sign of aggressive long positioning at the top. Since then, funding has cooled sharply, dipping briefly negative around September 9 and again near September 13, both of which lined up with rounds of long liquidations. Heading into the Fed decision, funding sits close to flat at 0.0015%, suggesting much of the excess long leverage has already been cleared out.

Liquidations Reflect the One-Sided Pressure

The past 24 hours have been rough for leveraged longs. XRP saw $33.44 million in total liquidations, with long positions accounting for $27.81 million of that, more than 83% of the total. Shorter windows show the pressure hasn’t let up: $185.58K was liquidated in the past four hours alone, with longs making up nearly two-thirds of that figure. The pattern is consistent: traders positioned for upside have repeatedly been forced out as price slides toward the Fed decision.

Three Scenarios for the Fed Decision

• A hike (the expected outcome): Would likely confirm the current downside pressure, pushing XRP through the $1.19 and $1.22 Fair Value Gap and opening the door to further downside below it.
• A surprise cut: Would run counter to current positioning and could see XRP dip into the Fair Value Gap first, clearing out remaining liquidity, before reversing higher.
• A hold: Would likely keep XRP rangebound, with price continuing to chop sideways around current levels as the market waits for clearer signals on the path ahead.

XRP heads into the Fed decision already weakened, below its weekly low, with long traders bearing the brunt of recent liquidations and funding data showing leverage has been cooling for weeks. The rate decision itself is likely to decide whether price breaks lower or stages a recovery from the Fair Value Gap. 

Related: XRP Price Prediction: XRP Holds $1.28 as Clarity Act Defeat Pressures Market