XRP traders are taking a bold position despite the token’s weak price performance and growing liquidation risk.

Around $2.16 billion in new long positions have reportedly entered the market. This shows strong bullish conviction, but it also creates a dangerous imbalance. If XRP continues falling, heavily leveraged traders could be forced out of their positions, accelerating the decline.

XRP Faces a Critical Price Test

XRP has already fallen by more than 6% this month and has failed to maintain the gains recorded in July. Ethereum, meanwhile, has performed better during the same period, suggesting that larger investors currently have a stronger preference for ETH.

The situation became more concerning after XRP slipped below the important $1 level. Bulls now need to reclaim this area to reduce the risk of further losses.

If XRP remains below $1, the next move could take the price toward $0.98 or lower. With billions of dollars positioned on the long side, even a relatively small decline could trigger a larger liquidation event.

Institutional Demand Remains Weak

Fund flow data also highlights a noticeable difference between XRP and Ethereum.

XRP investment products have attracted only limited net inflows during August, while Ethereum products have received significantly more capital. This gap suggests that institutional investors are not currently supporting XRP with the same level of confidence.

Weak price action, limited institutional inflows, and a crowded long market create a risky combination. Unless demand improves, XRP may struggle to sustain a meaningful recovery.

RLUSD Growth Could Support a Rebound

Despite these concerns, the broader Ripple ecosystem is showing signs of expansion.

According to Token Terminal data cited in the original report, RLUSD added approximately $132 million in supply over seven days, making it one of the fastest-growing assets during that period. Ripple also ranked among the fastest-growing issuers.

This growth matters because a larger RLUSD supply could bring additional liquidity and activity to the XRP Ledger. Increased stablecoin usage may strengthen the network’s utility, even while XRP’s market price remains under pressure.

The XRP-to-ETH ratio is another factor traders are monitoring. Some technical signals suggest that the ratio could recover. If that happens alongside continued RLUSD expansion and improving market conditions, XRP could develop a stronger rebound setup.

Are XRP Bulls Seeing Something Bigger?

The $2.16 billion increase in long exposure may initially look reckless, especially while XRP trades below a major support level. However, bullish traders may be positioning for growth across Ripple’s wider ecosystem rather than reacting only to short-term price movements.

Their strategy still carries considerable risk. XRP needs to recover above $1, attract stronger spot demand, and avoid a chain of leveraged liquidations. Without those improvements, the crowded long market could quickly become a weakness.

For now, XRP is caught between two competing signals. Its price structure and institutional flows remain fragile, while RLUSD growth points toward rising network activity and deeper liquidity.

The next move around $1 could determine which side takes control. A strong recovery may validate the confidence of bullish traders. Continued weakness, however, could turn the $2.16 billion long bet into a painful long squeeze.

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