Several major cryptocurrencies saw a slight rebound this week, pushing the combined market cap above $3 trillion. Ripple (XRP) surged by 8% today, reaching a temporary high of $2.30.

However, new insights highlight that XRP continues to be significantly influenced by sellers.

Is Ripple Running Out of Momentum?

Recent findings from CryptoQuant indicate that there is a marked decrease in XRP market participation, with derivatives metrics on Binance hitting a low not seen since November 2024. The Open Interest for XRP on Binance has plummeted from peaks over $1.7 billion to approximately $504 million, having dipped to around $473 million. This significant decrease reflects a substantial withdrawal of liquidity from leveraged positions on both sides, suggesting a waning conviction among traders.

The decline in Open Interest has coincided with XRP momentarily falling below $2 over the weekend, just prior to the latest rebound. CryptoQuant elucidated that the ongoing drop in price and Open Interest signifies that market participants are refraining from reopening positions, leading to a trading atmosphere predominantly driven by short-term activity rather than a solid buildup of demand.

Additionally, negative funding rates over the last two months signify that short sellers have been compensating to maintain their positions, indicating persistent selling pressure and insufficient buying strength.

When examining the trends in Open Interest, funding rates, and price fluctuations, the evidence points towards a clear weakening of momentum across the XRP market. Although XRP managed to rebound to $2.23 recently, the on-chain analytics platform asserts a lack of substantial accumulation from larger market players or institutional investors. If these metrics do not improve, XRP is likely to face enduring selling pressure.

The $2 Support Level is Crucial

In spite of the concerning derivatives data, the pseudonymous crypto analyst CRYPTOWZRD asserted that XRP appears strong following a robust bullish daily close and progress in the XRP/BTC pair, projecting further price increases. Yet, they caution that a minor, short-lived pullback would be typical and could offer traders better entry points before the next upward trend.

Related Reads:

• The Second XRP ETF Hits US Markets Today: Here’s How It’s Going So Far
• $180M Liquidated in 1 Hour as BTC, ETH, and XRP Crash Harder
• Ripple’s XRP Hit $2.03 for a Reason: Analysts Say the Macro Bottom Is In

Analyst Ali Martinez has suggested that XRP might be forming a bullish technical pattern known as a right-angled ascending broadening wedge, which often signals the potential for further increases. However, this scenario remains plausible only if the token maintains above the essential $2 support level. Should this threshold fail, the pattern may collapse.