XRP slumps as record ETF outflows and liquidations intensify
- XRP extends losses, down over 2.5% on Friday amid persistent bearish sentiment.
- XRP ETFs recorded the largest single-day outflow of nearly $93 million on Thursday.
- Leverage XRP traders face the highest liquidation in three months, totalling $57 million, as retail interest wanes.
Ripple (XRP) is trading under intense selling pressure, down over 2.5% intraday to $1.75 at the time of writing on Friday. The cross-border remittance token faced significant capital flight on Thursday, with the highest outflow from Exchange-Traded Funds (ETFs) since launch. With risk-off sentiment still persistent, XRP is at risk of extending the bearish momentum into the weekend.
XRP plunges as capital flight intensifies
XRP spot ETFs recorded the largest single-day outflow of nearly $93 million on Thursday, reducing the cumulative inflow to $1.17 billion and net assets under management to $1.21 billion. ETF flows serve as a gauge for market sentiment, with large or steady outflows indicating that investors lack confidence in XRP amid heightened Volatility.
Meanwhile, liquidations hit a record $57 million on Friday, the highest in three months, according to CoinGlass data. If the current volatility continues and XRP price extends its downtrend, more traders will be forced out of their leveraged long positions, adding to the selling pressure.
Retail interest in XRP is evidently declining as futures Open Interest (OI) fell to $3.21 billion on Friday, from $3.46 billion the previous day. OI tracks the notional value of outstanding futures contracts; hence, low retail activity indicates that investors lack confidence in the token’s ability to sustain an uptrend. It also means that investors are closing positions rather than opening new ones, depriving XRP of the tailwind to recover.
Technical outlook: Assessing XRP’s recovery potential
XRP hovers between support at $1.72 and support-turned resistance at $1.81, as bears push to extend their control. The down-trending 50-day Exponential Moving Average (EMA) at $2.00, the 100-day EMA at 2.13 and the 200-day EMA at $2.27 confirm the short-term bearish outlook.
An extended sell-off toward the April low of $1.61 could ensue if the Moving Average Convergence Divergence (MACD) indicator remains below its signal line on the daily chart. Red histogram bars expanding below the zero line could encourage investors to reduce exposure, adding to the selling pressure.
The Relative Strength Index (RSI) at 34 on the same chart is poised to slide into oversold territory, as bearish momentum accelerates.
Still, XRP could head for a knee-jerk reversal as market participants react to United States (US) President Donald Trump's nomination of Kevin Warsh as the next Federal Reserve (Fed) Chair – Warsh served as Fed governor and as an economic adviser to the president.
Crypto markets sold off as risk-off sentiment surged after Wednesday’s Fed decision to leave interest rates unchanged, offering no lifeline to riskier assets.
XRP sellers remain in control unless bulls push to reclaim December 31 support at $1.81 and the next key hurdle, the 50-day EMA at $2.00.
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.
Author
John Isige
FXStreet
John Isige is a seasoned cryptocurrency journalist and markets analyst committed to delivering high-quality, actionable insights tailored to traders, investors, and crypto enthusiasts. He enjoys deep dives into emerging Web3 tren
