XRP, a long-standing crypto favorite, is currently facing significant downward pressure, with experts pointing to two key on-chain metrics that suggest its price could "dump" even further. Despite its loyal community, XRP's short-term outlook appears increasingly bearish. What are the critical reasons behind this potential plunge, and can it find a floor before falling to new lows?
Low Leverage & Fading Confidence: The ELR Signal ๐
According to data from on-chain analytics platform CryptoQuant, the Estimated Leverage Ratio (ELR) for XRP has dropped to 0.36, marking its lowest weekly close in a month. The ELR is a crucial indicator of investor confidence and risk appetite in the derivatives market. A declining ELR suggests that traders are pulling back from high-leverage positions, becoming more cautious about the token's short-term prospects. This lack of appetite for risk indicates a pervasive lack of confidence among traders, which could lead to further selling pressure in the coming days and weeks, pushing the price down.
Sustained Selling: The Negative Spot Netflow ๐ธ
The second major red flag for XRP is a continuous and significant negative spot netflow, with over US$222 million in net outflows recorded since July 29, according to data from Coinglass. A negative netflow signifies that more XRP is being sold than bought on spot exchanges, indicating dominant selling pressure and weak buying interest. This imbalance between supply and demand can be a powerful catalyst for a price decline, as a steady stream of sellers outweighs the dwindling number of buyers. This sustained negative netflow paints a grim picture for XRP, suggesting that the current downtrend could accelerate.
Critical Supports: The Path to Plunge or Rebound ๐ฏ
With XRP currently trading in a precarious position, key support levels will determine its short-term fate. The article warns that if the support at US$2.71 fails to hold, XRP could fall further towards US$2.50. This would be a significant psychological blow to the community and could trigger a new wave of panic selling. However, if buying momentum miraculously strengthens, a breakout above US$3.00 could trigger a rally towards US$3.39, potentially invalidating the bearish outlook. The coming days will be a crucial test of strength, determining whether XRP can find a floor or if it succumbs to the bearish pressure.
Conclusion
XRP is facing strong headwinds, with two critical on-chain metrics a declining Estimated Leverage Ratio and persistent negative spot netflow pointing to a high probability of a further price dump. These signals indicate a lack of investor confidence and dominant selling pressure, which could push the price below key support levels. While a miraculous rally is not out of the question, the current technical and on-chain landscape suggests that extreme caution is warranted. The coming days will be a test of whether XRP can hold a floor or if it will be driven to new lows by these prevailing bearish forces.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry a high level of risk and volatility. Always conduct your own research (DYOR) and consult a professional financial advisor before making any investment decisions.