Derivatives market shows bearish pressure, but funding rate recovers.
Exchange reserves decline, signaling potential accumulation and rebound.
Technical indicators suggest XRP could challenge $2.83 resistance soon.
XRP eyes a breakout toward $2.83 while holding above $2.27 support.
With Bitcoin and Ethereum gradually stabilizing at lower levels for a potential comeback, XRP positions itself at a critical level. Trading between the $2.50 cyclical mark, XRP faces a pullback of 2.06% over the past 24 hours.
Furthermore, over the past 7 days, it has dropped nearly 22%, declining its market cap to $140 billion. Nevertheless, it still remains the fourth biggest cryptocurrency in the market.
However, the growing speculations in the derivatives market might prolong its correction phase. The selling pressure remains dominant, restricting any significant bullish breakout.
Rising Funding Rate Reflects Sentimental Shift
Despite an open interest of $3.65 billion, XRP witnesses a slightly greater number of selling positions. This is because the long-to-short ratio over the past 24 hours remains at 0.9708, while the bulls struggle to equalize the playing field.
The funding rate is on the verge of entering positive territory. Over the past few hours, the XRP funding rate has significantly improved from the recent dip of minus 0.0077% to reaching 0.0004%.
This shift indicates a growing optimism among traders, suggesting potential price stabilization. If the funding rate continues to improve, it could support an uptrend.
Hence, despite the minor drop in open interest and unequal long-to-short ratio, favorably on the bearish side, the bullish speculations are improving the funding rate. This reflects the broader market anticipating XRP to start a positive trend.
Declining Exchange Reserves to Increase XRP Demand
Along with the bullish expectations in the derivatives field, the XRP ledger Exchange Reserve, which has been in a declining trend since January 16, has dropped from 3.04 billion XRP to 2.76 billion XRP. This accounts for a massive X percent drop in the Binance Exchange Reserve.
A decreasing exchange reserve typically signals accumulation, hinting at reduced selling pressure. If this trend continues, a price rebound could be imminent.
Hence, with the significant outflow of XRP from the world’s biggest centralized cryptocurrency exchange, the reduction in supply is likely to artificially bounce back in XRP prices.
XRP Price Analysis
In the daily chart, the XRP price trend reveals two consecutive bearish candles, prolonging the downfall to $2.38. However, with the intraday recovery of 2.70%, XRP is back at a market price of $2.44, as it sustains a dominance above the S1 support pivot level at $2.27.
The chances of a bullish continuation remain significant. Furthermore, the altcoin takes support from the 100-day EMA, despite breaking under the 50-day EMA line.
As the speculations in the derivatives market and the recovering and potential demand surge from the exchanges, XRP is likely to challenge the S1 pivot level at $2.83. On the flip side, closing under $2.2781 will likely test the $2 psychological mark.