Ripple (XRP) Derivatives Market Signals Bearish Trend
The price of Ripple (XRP) is currently hovering just above the $0.50 level, but there are worrying signs in the derivatives market. Short traders are tightening their grip on XRP, raising concerns about a potential bearish price reversal below the critical $0.50 support.
XRP Open Interest Up Amid Price Downtrend
Despite a 6% decline in the past week, XRP has faced a series of bearish news events. The recent hack that resulted in Ripple Labs’ co-founder losing $120 million has further tilted the market momentum towards bears. The price has dropped from $0.54 to $0.50 between January 30 and February 6. Additionally, open interest in XRP futures contracts has increased by $66 million, indicating that short traders are doubling down on their positions.
XRP Short Positions Outnumber Bullish Contracts
The long-to-short ratio for XRP has trended below 0.99 for most of the last 30 trading days, indicating prolonged bearish dominance. Currently, 50.7% of active XRP futures contracts are short positions, while only 49.3% are longs. This suggests that more traders anticipate further price decline and hold short positions.
XRP Price Forecast: Imminent Reversal to $0.45?
The Parabolic SAR technical indicator also supports the bearish price forecast for XRP. The indicator’s current alignment indicates a dominant bearish momentum, with the price potentially declining below $0.50. Traders interpret this as a signal to sell or enter more short positions.
Hot Take: Downswing Expected for XRP
Considering the negative divergence between price and open interest, the low long-to-short ratio, and the bearish signals from the Parabolic SAR indicator, investors should anticipate a downswing below $0.50 in the coming days. If the support at $0.45 fails to hold, further decline towards $0.40 is possible.
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