XRP Faces Prolonged Consolidation Below $2.73 Resistance Amid $1 Billion Decline in Futures Open Interest

• XRP is currently experiencing significant challenges as it remains stuck below the critical resistance of $2.73, causing a wave of market skepticism.

• As trading volumes and investor confidence decline, XRP’s inability to break resistances is triggering increasing caution among traders.

• “The recent drop in Futures Open Interest by $1 billion underscores the growing bearish sentiment towards XRP,” a COINOTAG analyst noted.

XRP faces mounting challenges as it struggles with resistance at $2.73, while Futures Open Interest declines by $1 billion, indicating bearish sentiment.

XRP Futures OI sheds $1 billion

Source: Coinglass

Over the past 48 hours, XRP Futures Open Interest has seen a staggering decline of $1 billion, falling from $2.9 billion. This decline is a clear reaction to a failed breakout attempt that momentarily boosted trader optimism.

As traders exited positions, the sudden drop in Open Interest reveals an increasing bearish outlook for XRP. The struggle to surpass key resistance levels enhances doubts about the token’s near-term recovery.

XRP: Critical investor uncertainty?

The Divergence in Daily Active Addresses (DAA) chart for XRP reveals a troubling discrepancy between price movements and network engagement.

Despite XRP’s price rally in late November, the DAA divergence dropped sharply, indicating that the rise was not supported by proportional increases in network activity.

This discrepancy suggests that the recent price shifts were largely influenced by speculative trading rather than genuine adoption or utility growth.

Source: Santiment

Following the recent rally, the DAA divergence has remained negative, reflecting a persistent skepticism among on-chain participants about the viability of future price increases.

Without a significant rise in active addresses, XRP’s ability to maintain upward momentum looks precarious, casting doubts on any potential short-term recovery, unless network fundamentals show notable improvement.

Key levels to watch

XRP’s price remains at a crucial crossroads, defined by a lengthy consolidation phase just below the $2.73 resistance level.

In the past month, XRP has lost approximately 20% of its value; however, it is crucial to note that it has managed to stay above the crucial $2.00 support level.

This support zone acts as both a psychological and technical flooring, staving off further downward pressure even in the face of rising uncertainties across the crypto market.

Source: TradingView

Current indicators present a mixed narrative regarding XRP’s near-term trajectory. The Relative Strength Index (RSI) is positioned around 50.98, indicating a neutral market sentiment and indecision among traders.

Trading volumes remain low, signaling a lack of the needed buying pressure to facilitate a breakout above current resistance levels.

Furthermore, On-Balance Volume (OBV) metrics portray muted capital inflows, raising concerns about the token’s capacity to sustain an upward path without a resurgence in investor interest.

A successful breakout above the $2.73 barrier could catalyze a climb towards XRP’s all-time high of $3.31, potentially rekindling investor enthusiasm.

On the flip side, breaching the $2.00 support might exacerbate prevailing market stagnation, deepening the overall bearish sentiment surrounding XRP.

In the absence of a definitive catalyst, XRP seems stuck in a cautious balancing act, its next directional move hinging on broader market trends and the revival of confidence in its underlying network fundamentals.

Conclusion

XRP’s current landscape is marked by a strong resistance level and weakening investor confidence, as indicated by the decline in Futures Open Interest. Until crucial support levels are either confirmed or breached, market participants should remain vigilant for signs of either recovery or further consolidation.