- XRP is showing signs of recovery as investors accumulate, but the derivatives market remains weak, with open interest dropping over 30%.
- While a break above $2.55 could spark bullish momentum, a dip below $2.26 may trigger an $80 million long squeeze, making these key levels crucial for traders.
Ripple’s XRP is showing signs of recovery as investors lean toward accumulation, despite a sluggish derivatives market. With on-chain data signaling a potential price rally, XRP is eyeing the $2.55 mark. However, caution remains as a downturn could trigger significant liquidations.
XRP Investors Shift to Accumulation
After the crypto market crash on February 3, XRP investors have taken a “buy-the-dip” approach, as indicated by an uptrend in the Mean Coin Age metric. This metric, which tracks how long XRP tokens remain in their current addresses, suggests that holders are holding onto their assets rather than selling. Historically, such accumulation phases have been followed by upward price movements.
Furthermore, the 30-day Market Value to Realized Value (MVRV) ratio has hit -17%, a level that previously led to a 60% XRP rally. If history repeats itself, XRP may be poised for another strong price increase.
Derivatives Market Yet to Recover
Despite strong accumulation signals in the spot market, XRP’s derivatives market tells a different story. Open interest in XRP futures has dropped by over 30%, declining from 2.05 billion XRP to 1.42 billion XRP. Funding rates have also been negative in recent days, reflecting cautious sentiment among traders.
Open interest represents the total number of outstanding contracts in the derivatives market, and a decline suggests that traders are pulling back. For a sustained rally, XRP’s open interest needs to see renewed growth.
Price Outlook: Key Levels to Watch
Currently, XRP is trading within a rectangular channel, with $2.26 as a strong support level and $2.55 acting as resistance. Should XRP break above $2.55 and surpass the $2.72 resistance, it could reignite bullish momentum, attracting more buyers into the market.
However, a dip below $2.26 could lead to an $80 million long squeeze, forcing liquidations and pushing the price toward the $1.96 support level.
The Bigger Picture: ETF Developments and SEC’s Role
Adding to the intrigue, the SEC recently acknowledged Grayscale’s XRP ETF filing, increasing speculation about potential approval. Bloomberg analysts have placed a 65% chance on approval, which could have a significant impact on market sentiment.
Final Thoughts
While XRP shows promising signs of recovery, the derivatives market remains hesitant. If the bullish indicators play out, a move toward $2.55 and beyond is likely. However, a break below $2.26 could lead to heavy liquidations, making it a critical level for traders to watch.
