XRP bearish outlook persists as ETF inflows fail to counter weak market sentiment
|- XRP trades amid increasing downside pressure, as steady ETF inflows fail to shift sentiment.
- Retail demand remains suppressed as Open Interest in the derivatives market stabilizes at around $3.71 billion.
- A weak technical structure weighs down on XRP, making a recovery unlikely in the short term.
Ripple (XRP) is extending its decline for the second consecutive day, trading at $2.06 at the time of writing on Friday. Sentiment surrounding the cross-border remittance token continues to lag despite steady inflows into XRP spot Exchange Traded Funds (ETFs).
A reversal below the prevailing market level will likely extend the pullback to Monday’s low of $1.98. Hence, the next few days would help gauge sentiment ahead of the Federal Reserve’s (Fed) monetary policy meeting on December 10.
XRP ETFs steady, but sentiment remains weak
Interest in XRP spot ETFs has steadied since their debut on November 13, signaling a potential shift to altcoin-based crypto investment products. A total of $13 million marked a 14-day streak of positive inflows on Thursday, according to SoSoValue data.
XRP ETFs have cumulative inflows of $887 million and net assets of $881 million. A break above $1 billion would mark the next milestone and possibly set the stage for larger inflows.
Steady ETF inflows support positive sentiment, encouraging investors to increase exposure and anticipate a sustained uptrend.
Meanwhile, the demand for XRP derivatives remains shaky, with futures Open Interest (OI) dropping to $3.71 billion on Friday, from $3.85 billion the previous day.
OI has been on a general downtrend since mid-July, when the price of XRP reached a new all-time high of $3.66. The October 10 deleveraging event left many traders in losses, further weakening sentiment.
A significant decline in OI indicates that investors have lost confidence in the token’s ability to sustain an uptrend, which may continue to cap rebounds.
Technical outlook: XRP sellers tighten their grip
XRP is trading at $2.06 at the time of writing on Friday, but the token is also pressed below the 50-day Exponential Moving Average (EMA) at $2.30. The 100-day EMA at $2.46 and the 200-day EMA at $2.49 slope lower and cap rebounds.
The Moving Average Convergence Divergence (MACD) line about to slide below the signal line on the daily chart, as green histogram bars contract, suggesting fading momentum. At the same time, the Relative Strength Index (RSI) stands at 42 on the same chart, below the neutral midline, indicating lingering bearish pressure.
Parabolic SAR indicator sits beneath price, with the latest dot at $1.88, offering nearby trailing support. The descending trend line from $3.66 caps XRP's upside, with resistance seen at $2.63, while the rising trend line from $1.62 offers support near $1.83. A daily close above the 50-day EMA at $2.30 would ease pressure and open room toward the 100-day EMA at $2.46. Still, a drop through the trend-line (green) base would reassert the downtrend and risk fresh lows.
Open Interest, funding rate FAQs
Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.
Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.
(The technical analysis of this story was written with the help of an AI tool)
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