The crypto market’s current bearish sentiment is impacting even tokens with solid fundamentals, as traders shift their focus from long-term holding to selling on short-term price fluctuations. Notably, XRP, one of the notable tokens by market cap, has seen a reversal of its gains following Ripple Labs’ pivotal court victory against the SEC in July. The recent market crash, combined with the SEC’s decision to appeal the court’s ruling, brought a surge in selling activity. This raises concerns about XRP potentially falling below the significant $0.5 level.
Traders Show Less Interest In XRP’s Future Positions
As XRP failed to meet traders’ expectations, there has been a significant decline in XRP’s future positions. On-chain data reveals a continuous decrease in XRP’s open interest over the past six days. The open interest metric fell from $700 million on August 17 to $440 million, as of today.
Declining open interest is bearish for XRP because it indicates a decrease in the number of active contracts or positions in the market. A drop in open interest suggests that traders are closing their positions, which can be concluded as a lack of confidence in the token’s future price movement.
In the context of XRP, a falling open interest might imply that traders are becoming less interested or optimistic about its potential upside, signaling a bearish sentiment.
However, XRP’s RSI level brings bullish confidence among holders. As seen on the daily price chart, the RSI level has formed a ‘V’ shape and currently trades near the oversold region at level 33. This suggests a possible recovery or a temporary uptick in the near future for XRP’s price.
Will XRP Decline Below $0.5?
Despite strong selling pressure from bears, buyers successfully rebounded the XRP price above the 20-day EMA trend line at $0.5232. Currently, there’s an intense battle between bulls and bears to trigger a clear move. As of writing, XRP price trades at $0.523, surging over 1.7% in the last 24 hours.
The bearish forces seem to be halting the upward momentum around $0.56, suggesting a rising negative sentiment as traders opt to sell during minor upward rallies. If the price declines and drops below its current consolidation near $0.52, it will suggest that the XRP price might hover between $0.45 and $0.49 for some time.
On the 4-hour price chart, the stable EMA trend lines and the RSI surged above the midline with a current level of 52, hinting at a bullish comeback. A clear sign of bullish momentum would be a sustained break above $0.58, indicating a potential decrease in bearish intensity. This could push the price to test its resistance near the upward trend line of $0.64.