Interest in Ripple (XRP) is declining as key on-chain indicators signal weakness in the near term. With positive market sentiment waning, these factors suggest a potential further decline in Ripple prices in upcoming trading sessions.
XRP traders are running out of money: the $222 million exit signal is concerning.
The estimated leverage ratio of Ripple (XRP) on the leading Binance platform is declining, indicating a decrease in investor confidence and a reduced risk appetite. According to CryptoQuant, the leverage ratio currently stands at 0.36, its lowest weekly close in the past month.
Estimated leverage ratio of XRP. Source: CryptoQuant
The estimated leverage ratio (ELR) of the asset measures the average leverage that traders use to make trades on the cryptocurrency trading platform. It is calculated by dividing the open contracts of the asset by the platform's reserves of that currency.
The decline in ELR value for XRP indicates a decrease in traders' risk appetite. This suggests that investors have become more cautious about the currency's short-term outlook, avoiding high-leverage positions, which may increase the risk of losses.
This trend is no different among participants in the spot market. According to Coinglass data, XRP has recorded net outflows exceeding $222 million since July 29, indicating seller dominance and weak buying pressure.
Net XRP instant flow. Source: Coinglass
When an asset experiences negative net cash flows, traders sell their holdings and realize profits, while fewer buyers will step in to replace them.
This trend may exacerbate XRP's current bearish trend, as demand for the asset decreases while supply increases.
XRP's price dropped to around $2.71 - but a breakout to $3.39 is still possible.
With increasing selling pressure, XRP faces the risk of dropping to $2.71. If this support level does not hold, it may see a further decline to $2.50.
XRP price analysis. Source: TradingView
On the other hand, a breakout above the $3 level is still possible if buying momentum increases. A breakthrough at this level could pave the way for a rise towards $3.39.