The current bearish sentiment in the crypto market is affecting even tokens with solid fundamentals as traders shift their focus from holding for the long term to selling based on short term price movements. In particular, XRP, one of the notable tokens by market cap, has seen a reversal of its gains following Ripple Labs’ pivotal win against the SEC in July. The recent market crash, combined with the SEC’s decision to appeal the court’s ruling, has fueled a surge in sales activity. This raises concerns that XRP might fall below the $0.5 significant level.
Traders show less interest in XRP’s future positions
As XRP failed to live up to traders’ expectations, there has been a significant decline in XRP’s future holdings. On-chain data shows that XRP’s open interest has declined continuously over the past six days. The open interest measure fell from $700 million on Aug. 17 to $440 million as of today.
Falling open interest is bearish for XRP as it indicates a decrease in the number of active contracts or positions in the market. A drop in open interest indicates that traders are closing their positions, which can be concluded as a lack of confidence in the future price movement of the token.
In the context of XRP, falling open rates could imply traders becoming less interested or more optimistic about its potential upside, pointing to bearish sentiment.
However, XRP’s RSI level is driving bullish confidence among holders. As can be seen on the daily price chart, the RSI level has formed a ‘V’ shape and is currently trading near the oversold area at level 33. This indicates a possible recovery or temporary rise in the near future for the price of XRP.
Will XRP Drop Below USD 0.5?
Despite strong selling pressure from bears, buyers have successfully pushed XRP price above the 20-day EMA trendline to USD 0.5232. Currently there is an intense battle going on between bulls and bears to make a clear move. At the time of writing, XRP price is trading at USD 0.523, up more than 1.7% in the past 24 hours.
The bearish forces appear to be halting the upside momentum around $0.56, pointing to rising negative sentiment as traders choose to sell during small upward rallies. If the price falls and drops near USD 0.52 below the current consolidation, it will indicate that XRP price could fluctuate between USD 0.45 and USD 0.49 for some time.
On the 4-hour price chart, the stable EMA trendlines and the RSI rose above the centerline with a current level of 52, indicating a bullish comeback. A clear sign of bullish momentum would be a sustained break above USD 0.58, indicating a potential decrease in bearish intensity. This might prompt the price to test its resistance near the USD 0.64 uptrendline.