XRP is facing renewed selling pressure after failing to hold its recent rebound, but Open Interest has continued to rise despite the price crash.
While the price has dropped from its March high of $1.60, XRP’s Open Interest has moved closer to the $1 billion mark, showing that traders are adding new positions rather than exiting. This indicates a strong short-term bias, but increases the risk of a short squeeze if a price spike emerges.
Key Points
- XRP rose 26% from $1.27 on Feb. 28 to $1.60 on March 17 before dropping 15% to $1.36.
- Despite the ongoing price downtrend, XRP’s Open Interest increased from $886 million to $946 million.
- OI-weighted funding rates turned negative at -0.0086, confirming that short positions dominate the market.
- Liquidation data shows $314 million in short positions clustered between $1.375 and $1.405, creating a strong upside trigger zone.
- This situation shows bearish bias but could lead to a short squeeze if the price spikes, possibly leading to higher price surges.
XRP Faces Renewed Pressure While Open Interest Climbs
XRP’s price decline is not unusual in the volatile world of cryptocurrency, but the steady rise in Open Interest (OI) during this period has caught the attention of market analysts. CryptoQuant author JA Maartunn highlighted this occurrence as “juicy,” while cautioning traders to stay vigilant.
For context, XRP climbed 26% from $1.27 on February 28 to reach $1.60 by March 17. However, the upward momentum stalled at this level, which acted as a resistance, resulting in a pullback. Currently, XRP trades at $1.36, marking a 15% decline from the recent high, yet it remains above the crucial $1.35 support level.
However, data shows that OI has moved in the opposite direction. On March 25 at 4 PM UTC, XRP traded for $1.42, with a total Open Interest of $886 million. By March 26 at 9 PM UTC, the price had fallen to $1.36, yet Open Interest climbed to $946 million. As of the latest updates, the price hovers around $1.36 while Open Interest has slightly eased to $933 million.
Simultaneously, data from Coinglass indicates that the OI-weighted funding rate recently dipped to -0.0086. The combination of rising OI and negative funding suggests that traders are opening new positions as the market downturn continues, predominantly in short positions. This indicates that the price decline is largely driven by traders betting against XRP rather than long holders exiting their positions.
Bears Hold Control, but the Setup Is Getting Risky
In the immediate short term, sellers are decisively in control. They have pushed XRP down from $1.42 to $1.36, even as more traders continue to enter the market. The increase in Open Interest confirms this bearish sentiment, with the negative funding rate indicating a strong prevalence of short positions.
However, this scenario also creates significant risk. An excessive number of traders on the same side of the market leads to instability in trends. If XRP starts to move in the opposite direction, it could trigger many traders to close their positions simultaneously, causing a sharp price movement.
XRP’s liquidation heatmap on Binance underscores the risk of a short squeeze, showing roughly $70 million in positions located at $1.375 and another $44.98 million at $1.3785. Overall, about $314 million in positions are spread between $1.375 and $1.405, primarily consisting of short positions that would face forced liquidation if prices rise.
These levels serve as potential targets for the market, as prices often gravitate toward areas where significant liquidations can occur, adding momentum to any upswings. Should XRP begin to approach this range, buying pressure from liquidated short positions could propel the price upward rapidly.
Two Possible Paths for XRP
The current market indicators point to two potential outcomes. In the first scenario, XRP may struggle to break above the $1.37 mark. Should this happen, sellers will maintain their grip, keeping Open Interest elevated while the price trend continues downward.
In contrast, the second scenario entails XRP breaking into the $1.375 to $1.38 range. This movement would activate the first wave of short liquidations, leading to forced buying that could propel the price toward the $1.38 to $1.405 zone, where the larger $314 million cluster resides. This could result in a swift and robust rally, potentially decreasing Open Interest as shorts are closed.
The critical resistance area lies between $1.375 and $1.38, where the first liquidation pressure is expected to emerge. Supporting this, the range from $1.38 to $1.405 contains the higher concentration of short positions. Meanwhile, on the downside, XRP is holding support between $1.34 and $1.36. Should prices dip below this range, sellers are likely to maintain control for a more extended period.
