The cryptocurrency market is turning all its attention to XRP as this coin has just experienced a significant drop in open interest. Is this a sign of an impending "crash", or just a necessary adjustment after a period of hot growth?
After reaching a peak of $3.66 on July 18, the price of XRP suddenly dropped sharply by 15%, resulting in an "evaporation" of $2.4 billion in the total value of open contracts for XRP futures. Although this figure is significant, the total value of open contracts remains high, indicating that traders are still holding substantial leveraged positions. This raises concerns about the potential for a chain liquidation wave, which could push the price of XRP below the $2.60 mark.
Leverage: XRP's "double-edged sword"
Analysis data shows that leverage is the main driving force behind the impressive 68.7% price increase of XRP from $2.17 to $3.66 in the first half of July. The total value of open contracts for XRP futures reached a record high of $11.2 billion before decreasing to the current $8.8 billion. This demonstrates the important role of leverage in shaping the price volatility of XRP in recent times.
Market sentiment: Worried but still optimistic?
Despite the significant drop in open interest, market sentiment towards XRP remains surprisingly neutral. Three-month XRP futures are still trading with an annual premium of 6% to 8% compared to the spot market. This indicates that traders are not overly concerned about XRP breaking the important support level of $3. Even when XRP rises above $3.60, there has not been a surge in demand for bullish leverage, helping to mitigate the risk of chain liquidations during normal market fluctuations.
ETF expectations and rumors: Is there enough strength to withstand?
Part of the recent optimism surrounding XRP comes from speculation about the approval of a spot ETF in the United States. In addition, the market is also influenced by unverified rumors about many banks adopting the XRP Ledger and Ripple's partnership with SWIFT.
However, one point worth noting is that activity on the XRP Ledger remains quite limited. The total value of tokenized assets is only $134 million, and DEX activity is not among the top 50 blockchains. This raises questions about the sustainability of actual demand for the XRP Ledger. Traders are looking for clear evidence of this sustainable demand before the price of XRP can establish consistent bullish momentum above $3.
Is XRP at a crossroads?
With the "evaporation" of billions of dollars in open interest and intertwining market factors, XRP is facing a challenging phase. Can this coin overcome the pressure of correction and regain strong growth momentum, or will it continue to decline further? The future of XRP will depend on whether it can demonstrate sustainable demand in reality, beyond expectations and rumors.
What do you think about the developments of XRP? Please share your thoughts in the comments section below!
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