XRP Faces Pressure as Active Addresses Drop and Selling Increases Amid Changing Market Sentiment

• XRP’s recent price trends highlight a potential shift as selling pressure mounts amidst a surge in active addresses.

• The current market sentiment is turning bearish, particularly as many new entrants appear to be cashing out.

• “Selling pressure in the derivatives market is gradually increasing,” as noted by a Coinglass source, indicating further potential declines.

This article explores XRP’s recent market dynamics, revealing a bearish turn as selling pressures increase, impacting traders and investors alike.

The Impact of Active Addresses on XRP Prices

Recent analytics show that the number of active XRP addresses has suddenly surged, pointing towards significant changes in market behavior. According to data from Glassnode, active XRP addresses experienced a dramatic increase of 620% in a short time frame, escalating from 74,589 to 452,650. This surge typically indicates rising demand, which, in theory, should positively influence pricing.

Source: Glassnode

Nevertheless, this uptick was fleeting. After reaching a peak on March 2nd, active addresses have begun to decline again, suggesting that prior holders may be selling off their assets, likely realizing any profits from recent gains. This reduction in active users can be a precursor to further bearish movements.

Evaluating Market Sentiment Through Key Metrics

Market sentiment appears to be turning increasingly negative, as evidenced by crucial metrics. The Open Interest Weighted Funding Rate serves as an accurate measure of this sentiment, with a recent drop to -0.0022% indicating rising selling pressure. This shift contrasts sharply with earlier reports, which highlighted a peak of 0.0103% during heightened buying activity.

Source: Coinglass

The consistent drop in trading metrics, where the Funding Rate currently stands at -0.0098%, underscores that sellers are not only dominant but are willing to pay a premium to hold their positions in anticipation of a price drop.

Spot Market Trends Indicating Seller Dominance

The last 24 hours have seen a significant sell-off from spot traders, adding further strain to XRP’s price stability. Notably, U.S. retail investors lead the charge, with Coinbase and Kraken facilitating a combined sell-off of $34.68 million. In contrast, top exchanges like Bybit and Binance saw purchases amounting to only $34.45 million worth of XRP.

Source: Coinglass

This trading activity has led to a net flow total of $230,000 across these top exchanges, illustrating a more pronounced selling activity than buying. Such trends could reverse XRP’s recent 0.90% gains over the past month, jeopardizing investor positions and pushing the token further into negative territory.

Conclusion

The evolving dynamics surrounding XRP showcase a distinct potential for further declines as market sentiment grows increasingly bearish. With rising active addresses not translating into sustained price effects and growing selling pressures evident in derivative markets, investors must remain vigilant. Should the trend continue, it may result in losing any accumulated gains, reinforcing the imperative for strategic trading considerations in the current market environment.