Key Points:
-
A 30% reduction in XRP open interest indicates a decrease in futures
trading activity. -
Should selling continue, the $2.33-$2.65 range represents a potential
support area. -
Large XRP inflows to exchanges suggest profit-taking, but the overall
long-term bullish trend aiming for $5 in 2025 is still viable.
The open interest (OI) for XRP futures, represented by the symbol
(XRP), has
shrunk
by 30% in the last month, falling from $11 billion to $7.7 billion, while
XRP’s value has fallen from a high of $3.66. Typically, a drop in open
interest points to less speculative trading, showing either investors
securing profits or a weakening confidence among traders using borrowed
funds.
The first quarter of the year saw a similar occurrence, where XRP’s OI
plummeted drastically by 65% from $8.5 billion to $3 billion, and spot
prices dropped by over 50%. The current pattern resembles that previous
movement, but not as intensely, which might mean that traders will start
accumulating assets once the OI establishes a new stable range.
From a technical analysis perspective, XRP has a daily fair value gap in the
$2.33 to $2.65 range, indicating this could be an area where demand
increases if the open interest continues to decrease. Often, a slowdown in
OI happens before prices stabilize or a new accumulation phase begins.
Historically, these phases have been opportune times to re-enter the market
before new upward movements.
XRP one-day chart. Source:
Cointelegraph/TradingView
Worth noting, liquidations are still relatively modest. Only $22 million
worth of long positions
were
eliminated on Monday, and $56 million during the 6% downturn on August 14.
Compared to typical market corrections in overheated markets, these figures
demonstrate a controlled reduction in leverage, decreasing the likelihood of
significant downward pressure.
In summary, the drop in open interest does create a reason for caution, but
it also provides a possible opportunity for a price bottom. Should XRP
maintain its position in the $2.33–$2.65 range, traders might see the
reduced leverage as a chance for a future price increase, instead of a
decline to new lows.
Related: XRP price fails to overcome $3: Is a breakout still
possible?
XRP Whale Activity Weighs on Short-Term Price
According to data from CryptoQuant,
the recent
jump in XRP’s price to $3.66 was supported by considerable inflows into
exchanges across all value segments. The most substantial activity was from
large holders, “whales”, with between 100,000 and 1 million XRP.
Historically, such exchange inflows have often preceded significant market
peaks, as demonstrated in 2018 above $3, around $1.90 in 2021, and near
$0.90 in 2023. This suggests that large investors are preparing to take
profits once more.
Currently, XRP is consolidating just below the $3 mark, as inflows remain
high, applying pressure on the price in the short-term. If whales continue
to sell off their holdings, there’s a risk of the price falling toward the
$2.60 support level.
However, a strong defense of the $3 level would indicate strength and could
set the stage for another bullish push. Overall, XRP’s larger uptrend is
still intact. In comparison to previous cycles, the digital asset remains
in a stronger technical position, keeping long-term targets above $5 in 2025
within reach, regardless of short-term ups and downs.
Related: Gemini flips Coinbase on app store after XRP
Mastercard launch
This information is not financial advice. Investing and trading carries
risk; conduct thorough research before making any decisions.