As Q3 2025 begins, the cryptocurrency market is witnessing fresh capital rotations, raising important questions about the dominance of Ethereum (ETH) and the potential resurgence of Ripple’s XRP. While Ethereum surged 36.48% last quarter, cementing its lead among altcoins, XRP’s modest 7.2% gain suggests a divergence that could shape the months ahead.

Recent data shows both XRP and ETH experiencing elevated funding rates, signaling increasing leveraged positions by traders betting on price movements. This development has fueled speculation that XRP could be gearing up to outpace Ethereum in the coming quarter, reshaping the altcoin landscape.

Funding Rates Rise for XRP and Ethereum: What It Means

Funding rates in futures markets provide a useful gauge of trader sentiment. Positive funding rates typically indicate that long positions are paying shorts, reflecting bullish sentiment and leveraged buying pressure.

Ethereum’s funding rate recently turned positive at 0.0083%, pointing to traders anticipating further upside. Meanwhile, XRP’s funding rates have also been on the rise, suggesting growing leveraged interest in the coin.

This parallel increase in funding rates raises a key question: Is Ethereum’s strong rally in Q2 driven by genuine spot demand, or has it benefited from capital rotating out of lagging coins like XRP?

Understanding this interplay is vital for predicting the trajectory of both tokens in Q3.

XRP/ETH Ratio Hits Support, Signs of a Local Bottom Forming

Despite Ethereum’s robust gains pushing its price above $2,800 by mid-June, XRP has lagged behind, gaining just 7.2% in the same timeframe. This contrast is reflected clearly in the XRP/ETH ratio, which reached a five-year high of 0.0013 early in Q2 before sharply falling 30% to hover around 0.0009 recently.

However, this decline found support near 0.0008, suggesting the ratio may be bottoming out. Historically, such rebounds have preceded phases of XRP strength relative to Ethereum. For example, in Q1 2025, while Ethereum suffered a steep 45.41% drop, XRP remained flat, causing the XRP/ETH ratio to surge by nearly 83%. That period marked a clear capital rotation from Ethereum into XRP.

The current technical rebound alongside rising funding rates hints that a similar rotation might be underway this quarter, signaling renewed confidence in XRP.

Whales Accumulate XRP, Strengthening the Comeback Case

Supporting this technical outlook are important on-chain signals. In June alone, whales holding between 10 million and 100 million XRP added roughly 310 million coins to their holdings. This increase brought their total to 8.11 billion XRP, making them the dominant cohort by supply for the first time this cycle.

Large holders accumulating XRP in such volumes is a significant signal of confidence and often precedes price rallies. Their activity aligns with the technical picture of XRP bouncing from support and rising funding rates, further strengthening the case for a capital rotation.

What Could This Mean for Ethereum’s Dominance?

Ethereum’s position as the leading altcoin remains strong, supported by its ecosystem and recent price gains. Yet the growing momentum in XRP—backed by whale accumulation and positive funding rates—raises the possibility of a reshuffling of power dynamics in the altcoin market.

If the trend continues, XRP could regain ground on Ethereum in Q3, similar to the surprising shift witnessed earlier this year. This would mark a notable change in market narrative, potentially inviting more speculative and strategic capital into XRP.

Watching Ahead: Key Indicators to Track

Investors and traders should closely monitor:

• The XRP/ETH price ratio for signs of sustained rebound.

• Funding rates for both XRP and Ethereum to gauge leveraged market sentiment.

• Whale activity and on-chain metrics indicating accumulation or distribution.

• Price action around critical support and resistance levels.

A combination of these factors will provide clearer insight into whether XRP’s comeback is sustainable or a short-lived rotation.

Conclusion

As Q3 unfolds, XRP’s growing momentum, fueled by rising funding rates and significant whale buying, signals a potential challenge to Ethereum’s altcoin dominance. The current technical and on-chain setup suggests a capital rotation could be underway, reminiscent of Q1’s market dynamics.

For investors seeking to navigate the altcoin space in the coming months, keeping an eye on XRP’s performance against Ethereum could be crucial in identifying new opportunities.