Examine the $XRP price outlook as Ripple experiences a decrease in open interest by $520 million, coinciding with the XRP/ETH ratio reaching a one-month low.
The price of Ripple (XRP) is currently facing bearish trends, having lost over 8% of its value in the past week, marking the most significant seven-day decline among the top ten cryptocurrencies by market capitalization.
As this downward trend continues, Ripple may struggle to maintain its competitive position against Ethereum, the largest altcoin, following the drop in the XRP/ETH ratio to its lowest point in a month.
XRP Sheds $520M in Open Interest as Long Liquidations Surge
According to data from Coinglass, Ripple's open interest has decreased from $4.15 billion to $3.63 billion within a week, resulting in a loss of over $520 million.
This significant drop comes after a wave of long liquidations, with more than $8 million in positions held by long buyers being forcibly closed in the past 24 hours as the price of $XRP fell.
The decreasing open interest may hinder a significant rally for Ripple, as it suggests that futures traders are reluctant to initiate new positions while closing existing ones due to price fluctuations.
However, the leverage level remains considerably elevated, with over 75% of Binance traders holding long positions, resulting in the long/short ratio reaching its peak in a month.
The initiation of new long positions indicates that numerous traders expect a rebound in the XRP price; however, an extraordinary downtrend may lead to liquidations, resulting in a decline in the Ripple price as those holding open positions are compelled to sell.
XRP/ETH Falls to Monthly Low
The price of XRP has been lagging behind other leading altcoins, particularly Ethereum.
The XRP/ETH ratio has fallen to its lowest point in a month, indicating that while Ripple is losing value, Ethereum has effectively maintained its support level and is expected to continue its dominance in the altcoin market.
Currently, this ratio is at 0.00118. Should the price of XRP persist in its downward trajectory and breach the subsequent support level at 0.00111, it will initiate the next phase of decline to 0.00102.
Additionally, the RSI indicates that the bearish momentum is strengthening, suggesting that Ripple is likely to experience further correction relative to ETH.
XRP Price Eyes Drop Below $2 Before Recovery
According to the analysis provided by trader CrediBULL Crypto, it is anticipated that the price of XRP will initially fall below $2 before experiencing a recovery.
The $2 mark is often regarded as a significant psychological support level for the altcoin; however, a decline beneath this threshold could trigger increased buying activity from traders looking to capitalize on the dip, potentially facilitating an upward movement.
Should Ripple decline to test the support level at $1.79, it may generate the necessary momentum to surpass the critical resistance level of $2.10. Successfully breaking through this level could lead to an XRP breakout towards $4.
In conclusion, $XRP 's price has faced significant selling pressure attributed to a spike in long liquidations, which have led to a decline in open interest exceeding $500 billion within a week.
As these negative factors persist, Ripple is losing its competitive advantage over Ethereum, with a potential breakout contingent upon a decline to test support levels below $2 before it can initiate a recovery trend.
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