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XRP price drops 5% as traders react to a broader market downtrend and muted responses to key crypto-related developments.
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Open interest falls 3%, signaling a decline in market participation and increasing uncertainty among XRP futures traders.
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Bearish momentum intensifies, with a negative Balance of Power and funding rates pointing to increased selling pressure and possible further declines.
XRP experiences a notable decline amid a broader market slump, raising concerns about its future price movements as market sentiment turns bearish.
XRP Traders Exit Positions as Open Interest and Price Decline
As XRP’s price recorded a dip in the past 24 hours, its open interest among futures traders has also plunged to $3.39 billion, noting a 3% drop during the same period.
XRP Open Interest. Source: Coinglass
Open interest measures the total number of outstanding derivative contracts, such as futures or options, that have not been settled. When an asset’s open interest falls alongside its price, it indicates a decline in market participation.
This trend signals that XRP traders are closing positions without opening new ones, indicating weakening market momentum and uncertainty in its price direction.
Additionally, XRP’s funding rate has been consistently negative in the past two days, signaling a heightened demand for short positions and reinforcing bearish sentiment. At the time of writing, this is at -0.0040%.
XRP Funding Rate. Source: Coinglass
The funding rate is a periodic fee exchanged between long and short traders in perpetual futures contracts to maintain alignment with the spot price. A negative funding rate, as observed with XRP, means short traders pay long traders, indicating a prevailing bearish market sentiment.
XRP’s Selling Pressure Intensifies—Will Bulls Step In to Defend Support?
On the daily chart, XRP’s negative Balance of Power (BoP) indicates a low demand for the altcoin. As of this writing, this indicator is trending downward at -0.38.
An asset’s BoP measures the strength of buying versus selling pressure by analyzing price movements over a specific period. When its value is negative, it signifies that sellers are in control.
If XRP demand weakens further, its price could break below the support floor of $2.13, potentially triggering a drop toward $1.47.
XRP Price Analysis. Source: TradingView
However, if the market trend shifts bullish and XRP traders begin accumulating more tokens, its price may rally past the resistance at $2.93 in an effort to reclaim its all-time high of $3.40, last reached on January 16.
Conclusion
As XRP navigates through increased selling pressure and a declining open interest, traders remain cautious. A clear takeaway is that the current bearish momentum necessitates vigilant monitoring. Should buying interest resurface, XRP could potentially manage a recovery, but the prevailing indicators suggest a challenging road ahead.
