XRP Bears Strengthen Their Hold as Market Activity Dwindles

XRP has experienced a significant drop of 9% in the last 24 hours, reflecting a general downturn in the cryptocurrency market. This decline has occurred despite the market's muted response to recent events such as Donald Trump's Strategic Bitcoin Reserve announcement and the conclusion of the White House Crypto Summit.

The bearish momentum around XRP seems to be increasing as market volatility escalates, potentially leading to further price declines.

Traders Liquidate Positions as XRP's Value and Open Interest Fall

In conjunction with XRP's price drop, the open interest among futures traders has also decreased, now standing at $3.39 billion—a 3% reduction in the same timeframe.

Open interest represents the total value of derivative contracts, such as futures, that have yet to be settled. A decrease in both price and open interest indicates a waning investor interest in the asset.

This trend suggests that XRP traders are closing their positions without entering new ones, highlighting a weakening market sentiment and uncertainty regarding future price movements.

Additionally, XRP’s funding rate has shown consistent negativity over the past two days, indicating a growing demand for short positions, thus reinforcing a bearish outlook. Currently, the funding rate is at -0.0040%.

The funding rate serves as a periodic fees exchanged between short and long traders in perpetual futures contracts, aimed at aligning contract prices with spot prices. A negative funding rate indicates that short traders are paying long traders, which suggests heightened bearish sentiment.

Increasing Selling Pressure for XRP—Will Buyers Step In?

According to the daily chart, XRP exhibits a negative Balance of Power (BoP), reflecting diminished buying demand. At present, this indicator is trending downwards at -0.38.

The BoP assesses the strength of buying versus selling pressure based on price movements over a specified period. A negative BoP suggests seller dominance in the market.

If demand for XRP continues to weaken, there is a risk of its price falling below the critical support level of $2.13, potentially sliding further down to $1.47.

However, should the market trend shift towards bullishness and XRP traders begin accumulating the asset, it may rise above the resistance level at $2.93, aiming to re-establish its previous all-time high of $3.40, last seen on January 16.