Ripple XRP: Open Interest Crashes to 1-Year Low

What to Know:

• XRP’s Open Interest on Binance has plummeted to levels not seen since November 2024, indicating a significant outflow of liquidity.
• Funding rates for XRP have frequently turned negative, suggesting persistent selling pressure and a lack of strong buying interest.
• Analysts suggest that XRP must maintain support above $2 to validate bullish technical patterns and prevent potential breakdowns.

XRP has experienced a notable pullback in trader activity, with Open Interest metrics hitting one-year lows, despite a recent minor market recovery. This drop signals a potential shift in market dynamics, suggesting that the digital asset may face continued selling pressure. Monitoring these trends is crucial for investors and traders assessing XRP’s short-term and mid-term potential.

The recent analysis from CryptoQuant highlights a significant drop in market participation for XRP, with derivatives metrics on Binance reaching their lowest point since November 2024. Open Interest has sharply declined from highs above $1.7 billion to around $504 million, reflecting a substantial outflow of liquidity from leveraged positions. This decline indicates fading conviction among traders, suggesting a shift away from long-term holdings to short-term trading strategies.

Funding rates further reinforce the bearish sentiment surrounding XRP, with rates frequently turning negative over the past two months. Negative funding rates mean that short sellers are paying to keep their positions open, indicating that selling pressure remains dominant. This persistent selling pressure suggests that buyers are not stepping in with sufficient force to offset the downward momentum, potentially hindering XRP’s ability to sustain upward price movements.

Despite these bearish signals, some analysts see potential for XRP if it can maintain critical support levels. Crypto analyst “CRYPTOWZRD” noted that XRP looks strong after a bullish daily close and a jump in the XRP/BTC pair, expecting further price increases. However, maintaining support above $2 is crucial, as a failure to hold this level could invalidate bullish technical patterns and lead to further price declines.

In conclusion, XRP’s current market dynamics present a mixed outlook, while derivatives data suggests caution, technical analysis offers a glimmer of hope if key support levels are maintained. Investors and traders should closely monitor Open Interest, funding rates, and price action to make informed decisions, keeping a close watch on regulatory developments and broader market trends.

Related: XRP Price: $12M Max Pain for Bears

Source: Original article