XRP rebound remains fragile amid reduced leverage on derivatives

Ripple (XRP) appears intent on making a comeback on Wednesday, as the price edges higher above $1.36. The token has sustained gains for the second consecutive day, sending subtle signals of a possible turnaround following the recent sell-off below $1.30.

Still, XRP faces structurally capped upside, with short- and long-term moving averages limiting its recovery potential. On the flip side, a medium-term support near $1.34 suggests that the downside is protected against headwinds, raising the odds of a recovery toward $1.40. Conversely, a decisive move below the same support area could trigger a larger sell-off, where XRP could be forced to confront lower demand areas at $1.12 and $1.00, respectively.

XRP derivatives face declining interest

XRP’s Estimated Leveraged Ratio on Binance has fallen 26.2% to approximately 0.169, from 0.229 in September, reflecting a notable reduction in the relative trader exposure to leveraged positions.

This drop suggests leveraged XRP positions are heavily undersubscribed as traders reduce risk exposure by closing open positions or relying less on leverage. Moreover, a lower ratio is likely to reduce the token’s sensitivity to volatility relative to leveraged positions. That said, this effect depends on broader crypto market conditions and the size of remaining positions.

“However, a decline in this metric does not necessarily mean that traders are shifting toward selling, nor does it independently signal a bearish or bullish market trend,” Arab Chain highlighted in the CryptoQuant Insights section, adding, “The decline may reflect a reduction in leveraged positioning, potentially mitigating the risks associated with liquidations.”

On perpetual futures Open Interest (OI), leveraged traders are signaling rising demand in the derivatives market, albeit slowly, with OI averaging 3.04 billion XRP on Wednesday, up from 2.84 billion XRP the day before. Overall, the figure falls well below the August and September peaks of 3.78 billion and 3.67 billion XRP. This outlook aligns with the Estimated Leveraged Ratio on Binance, suggesting that recovery could be an uphill battle if traders do not increase risk exposure by a significant margin.

Technical analysis: XRP ticks in a broader bearish structure

XRP trades above $1.36 as bulls push to reclaim control over the trend following the correction below $1.30 earlier this week. The remittance token holds below the 50-day and 200-day Exponential Moving Averages (EMAs) at $1.38 and $1.37, keeping the near-term bias bearish and suggesting rallies remain capped by overhead supply.

The SuperTrend line at $1.47 reinforces this ceiling, while the Moving Average Convergence Divergence (MACD) stays marginally below zero and the Relative Strength Index (RSI) hovers near 47, hinting at weak, directionless momentum rather than a decisive recovery.

Initial resistance appears at the 200-day EMA at $1.38, followed closely by the 50-day EMA, creating a tight technical barrier before the SuperTrend level at $1.47 and the broader downtrend structure defined by $1.62 and $1.70. On the downside, immediate support is offered by the 100-day EMA at $1.34, and a clear break under this floor would likely open the way for a deeper bearish extension in the coming sessions.

(The technical analysis of this story was written with the help of an AI tool. Know more.)