XRP faces downside risks as low retail demand and technical weakness persist
- XRP remains under pressure, with the price slipping toward $2.00 despite nine consecutive weeks of inflows into the ETFs.
- Low retail demand continues to weigh on XRP as highlighted by futures Open Interest narrowing to $4 billion.
- A downtrending RSI signals a weakening technical structure as volatility intensifies across the broader crypto market.
Ripple (XRP) is trading downward toward $2.00 at the time of writing on Monday, weighed down by declining retail interest. Despite steady inflows into related Exchange Traded Funds (ETFs), XRP faces increasing downside risks that could push its price below $2.00.
XRP wobbles amid low retail demand, steady ETF inflows
The XRP derivatives market has continued to weaken since Tuesday, when futures Open Interest (OI) surged to $4.55 billion. CoinGlass data shows the OI, representing the outstanding value of futures contracts, averaging $4 billion on Monday, reflecting the gradual decay.
This persistent decline suggests investors are losing confidence in XRP’s ability to sustain the uptrend and may be employing risk management measures to limit further losses.
Traders are increasingly piling into long positions in XRP, as reflected by the OI-Weighted Funding Rate metric, which has risen 0.0051% at the time of writing on Monday from -0.0018% earlier in the day. Lower prices could be attracting traders to lean into risk, which may add to the tailwind and drive XRP higher.
US-listed XRP ETFs have remained largely unaffected by price fluctuations, as they have recorded nine consecutive weeks of inflows since their launch in November. XRP ETFs drew $38 million last week, according to SoSoValue data, with inflows on Friday nearing $5 million.
The cumulative inflow stands at $1.22 billion, and net assets at $1.47 billion. Despite steady inflows into ETF products, a sustained recovery has been elusive, with XRP down almost 20% since mid-November.
Technical outlook: Can XRP defend key support?
XRP is trading at $2.04 at the time of writing on Monday and remains below the 50-day Exponential Moving Average (EMA) at $2.07, the 100-day EMA at $2.21, and the 200-day EMA at $2.32, keeping the broader tone under pressure. The Relative Strength Index (RSI) is at 51 and falling on the daily chart, signaling a likely transition from bullish to bearish momentum.
The Moving Average Convergence Divergence (MACD) blue line is poised to slide below the red signal line, which would confirm a sell signal. Since, positive histogram above the mean line has contracted, an immediate recovery in XRP price could remain elusive. A break below the $2.00 level could accelerate the downtrend toward a January 1 low of $1.81.
The descending trend line from $3.66 record high limits gains, with resistance at $2.33. A break above the 50-day EMA at $2.07 would target the 100-day EMA at $2.21, while clearance of the 200-day EMA at $2.32 and the trend resistance could shift the bias to the upside.
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.)
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
