XRP’s price has bounced back from its recent low of $1.89 on March 11, yet it continues to trade beneath a significant resistance level. Will XRP manage to maintain this recovery, or is a further decline on the horizon?
### XRP Funding Rates Indicate Bearish Sentiment
A strong indication of potential challenges ahead for XRP is the presence of negative funding rates and a decrease in open interest (OI) within its futures markets.
Key points to consider:
– Funding rates represent the periodic payments exchanged between long and short traders in perpetual futures contracts to ensure price alignment with the spot market.
– A negative funding rate indicates that short sellers are compensating long traders, suggesting a predominance of bearish sentiment.
– Currently, XRP’s funding rates linger below 0%, which reinforces the prevailing bearish outlook.
Negative funding rates tend to deter new buyers from entering the market, as holding long positions becomes less attractive. If this trend continues, XRP might experience a significant drop as market confidence wavers.
Moreover, XRP’s open interest in the futures market has plummeted from a peak of $5.67 billion on January 17 to $2.4 billion by March 18. Historically, assets with shrinking open interest struggle to sustain upward movements, as capital exits the market. For XRP, this scenario could mean that even minor selling pressure might trigger a wave of liquidations, particularly if leveraged positions are forced to close. Without renewed interest from either institutional or retail investors, XRP’s price is likely to face further downside.
### XRP’s Market Structure Signals a Potential Retest of $1.90
The four-hour chart for XRP shows an inverted V-shaped price pattern, suggesting a possible retracement.
Key takeaways:
– An inverted V-shaped pattern emerges when an asset’s price rises steeply to a peak before abruptly descending, forming an upside-down “V.”
– This formation indicates a depletion of buying pressure.
– The resistance area between $2.35 and $2.42 proves to be a challenge, coinciding with the positions of the 100-period simple moving average (SMA) and the 200 SMA.
– The relative strength index (RSI) has fallen below the 50 mark, highlighting the sellers’ dominant position.
– Bears now aim to breach the support zone between $2.28—aligned with the 50 SMA—and $2.20.
– Should this level be lost, XRP’s price may decline towards the neckline of the current chart pattern at $2.01, with a close below this point confirming a continuation of the downtrend, potentially leading to the area of the February 28 low of $1.94 and the March 11 low of $1.89.
The bulls need to maintain their position above the 50 SMA to hinder the ongoing downtrend. This could enhance XRP’s likelihood of breaking above the $2.35 to $2.42 resistance zone, and later onto the pattern’s high at $2.47, countering the bearish forecast.
A prominent crypto analyst remains hopeful about XRP’s chance to rebound from the downward trend and enter a price discovery phase. They noted, “The primary correction on the weekly, daily frame, and 4-hour structure is over for XRP.” While minor fluctuations are expected, the altcoin has “initiated Wave 1 targeting $5.85.”
Crucial levels to monitor include support at $2.22 and resistance at $3.39, with predictions indicating that the weeks ahead hold promising prospects.
This article does not provide investment advice or recommendations. Every investment and trading decision involves risk, and readers should conduct their own research before proceeding.