Ripple (XRP) Navigates Market Turbulence: A Detailed Analysis
Ripple’s XRP is trading slightly down on Thursday, following a sharp decline from its all-time high of $3.66. During the downturn, XRP tested support at $2.95 before rebounding to around $3.15.
Derivatives Market Reflects Price Drop
The derivatives market mirrors this price volatility. Open Interest (OI) in XRP futures has sharply reversed, falling below $10 billion. Leveraged investors have suffered losses, with liquidations nearing $100 million in the past 24 hours.
XRP’s Recovery Faces Headwinds
XRP is experiencing a significant shift in market sentiment. This is evident in the decline of Open Interest in futures contracts from a July peak of $10.94 billion to an average of $9.32 billion currently.
Decreasing Interest in XRP
This decline suggests a waning interest in XRP. Traders are either reducing their exposure or refraining from opening new positions. Open Interest represents the total value of outstanding futures or options contracts, indicating the amount of capital invested in XRP derivatives.
A continued downtrend in Open Interest would signal a lack of confidence in XRP’s ability to sustain an upward trajectory. Furthermore, the surge in liquidations to $98 million in the last 24 hours suggests that XRP faces strong upward resistance, potentially leading to a long squeeze and further sell-offs.
Long Positions Hit Hardest
Long position holders bore the brunt of the losses, accounting for $86 million in liquidations compared to $12 million in short positions. However, the liquidation of long positions has slowed significantly in the past four hours, hinting at a possible price rebound.
Altcoin Season on the Horizon?
Despite the recent downturn, CryptoQuant suggests a potential “altcoin season” may be underway. Their analysis indicates that altcoin spot trading volume reached $67 billion on July 17, signaling renewed trader interest in these coins.
CryptoQuant’s Spot Volume Bubble Map for XRP indicates neutral conditions, suggesting that XRP is not overbought and could potentially reverse its trend to reach new all-time highs above $3.66.
Technical Outlook: Recovery May Be Challenging
XRP’s price remains above the $3.00 support level, and its intraday low of $2.95. The current technical picture suggests that a sustained recovery may be difficult unless bulls aggressively buy the dip to generate upward momentum.
Bearish Signals Emerge
A downward-pointing Relative Strength Index (RSI) at 61 reflects a short-term bearish outlook. If the RSI continues to decline, bearish momentum could increase amid reduced buying pressure.
However, traders should temper their bearish expectations until the Moving Average Convergence Divergence (MACD) validates a sell signal on the daily chart. This signal, which often prompts investors to reduce their exposure, would occur when the MACD blue line crosses below the red signal line.
Red histogram bars below the zero line, a downward slope in the indicator, and a sudden increase in volume could further reinforce bearish control.
Medium-Term Outlook Remains Bullish
On the other hand, XRP’s medium-term outlook remains bullish based on the upward-trending moving averages. Should the decline accelerate below $3.00, the 50-day Exponential Moving Average (EMA) at $2.65, the 100-day EMA at $2.47, and the 200-day EMA at $2.25 would act as potential support levels to prevent XRP from falling below the critical $2.00 mark.
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