Will the price of XRP continue to fall?

The price of XRP has recovered from a low of $1.61 on April 7, however, it is still trading below an important resistance area. The question is whether the price of XRP can maintain this recovery or will it continue to decline in the coming days?

Daily XRP/USD chart | Source: TradingViewOne of the clearest signs that XRP may face difficulties is the emergence of negative funding rates and low open interest (OI) in the futures market.

The funding rate is the periodic payment between long and short traders in perpetual futures contracts, aimed at keeping the price aligned with the spot market. When this rate turns negative, it means that the short order setters are paying the long order setters, indicating that bearish sentiment is prevailing.

The funding rate of XRP has remained below 0% since the beginning of February, reflecting negative sentiment in the market.

The funding rate for perpetual futures contracts of XRP across all exchanges | Source: GlassnodeSimilarly, the open interest of XRP in the futures market has decreased from a local peak of $7.87 billion on January 17 to $3.06 billion as of April 10. Open interest measures the total number of open futures contracts, and this decline indicates that many traders are exiting their positions.

XRP Futures Open Interest | Source: CoinGlassHistory shows that assets with declining open interest often struggle to maintain upward momentum due to a lack of capital and enthusiasm to push prices higher. For XRP, this could mean that even small selling pressure could trigger a cascade of liquidations, especially if leveraged positions are unwound.

If there is no new interest from institutional or individual traders, the price of XRP risks sliding back into a downtrend.

XRP price faces resistance at $2.20

Traders are reassessing the breakout strength of XRP after the token failed to maintain its upward momentum.

The 21.5% increase of XRP on April 9 was halted by congestion around the $2.20 level. XRP was also unable to surpass this level on April 5, highlighting the significance of this resistance area. For a sustainable recovery opportunity, the price needs to convert this level into support.

This altcoin is still trading below the 50-day and 100-day simple moving averages (SMA). Currently, the token has support at $1.86, reinforced by the 200-day SMA.

XRP/USD weekly chart | Source: TradingViewA strong breakout above the resistance level of $2.20 followed by an increase above the 50-day SMA at $2.28, accompanied by high trading volume, could help the price of XRP move towards the 100-day SMA around $2.50.

On the contrary, the RSI index is still moving below the average line, indicating that market conditions are still leaning towards a bearish trend.

Therefore, if XRP closes below the 200-day SMA at $1.86, it could drop further to retest the local low at $1.61 or even lower to the level of $1.07, as previously predicted by veteran trader Peter Brandt.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct thorough research before making decisions. We are not responsible for your investment decisions.

• SEC and Ripple are nearing a final settlement agreement.
• Ripple will unlock 1 billion XRP next month.

Mr. Teacher

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