Interest in XRP is cooling off as key on-chain metrics signal potential weakness in the short term. With overall market sentiment weakening, these factors suggest that the price of XRP could decline further in upcoming trading sessions.
XRP Traders Are Running Out: $222 Million Exit Signals Raise Concerns
The estimated leverage ratio (ELR) of XRP on the leading exchange Binance is declining, indicating that investor confidence is waning and risk appetite is also decreasing. According to CryptoQuant, the ELR is currently at 0.36 - the lowest weekly close in the past month.
The ELR of an asset measures the average leverage that traders use to execute trades on a cryptocurrency exchange. This index is calculated by dividing the number of open contracts of the asset by the exchange's reserves for that type of currency.
The declining ELR index of XRP indicates that traders' risk appetite has diminished. This suggests that investors are becoming increasingly cautious about the short-term outlook for this coin and are avoiding high-leverage positions, which could increase the risk of losses.
This trend is no different among spot market participants. According to Coinglass data, XRP has recorded a negative net cash flow exceeding $222 million since July 29, indicating dominance of the sell side and weak buying pressure.
When an asset records a negative net cash flow, traders will sell their holdings and take profits, while fewer buyers will participate to replace them.
This trend could exacerbate the current downward trend of XRP, as demand for this asset decreases while supply increases.
XRP Price Drops Near $2.71—But Still Has Potential to Break Out to $3.39
As selling pressure increases, XRP risks falling to $2.71. If this support level does not hold, this altcoin could see a further sharp decline to $2.50.
On the other hand, the possibility of the price surpassing the $3 mark could still occur if buying momentum strengthens. Successfully breaking through this level could pave the way for a price increase to $3.39.
