What This Means for Traders

The XRP derivatives market fell to multi-month lows on the open gain, removing momentum, and setting up clean conditions for a potential trend reversal.

Ripple’s (XRP) price has been on a steady decline over the past month amid broader crypto weakness, having fallen more than 26% during that time. A fresh drop of nearly 3% on Wednesday renewed concerns that the pressure from last weekend’s price sell-off may not be fully exhausted.

But the new data suggests that the market reset following the shutdown could allow local demand to drive the price naturally, without the highly leveraged positions causing volatility.

The Market Reset Continues

The open interest of XRP (OI) on Binance has decreased significantly to $406 million, which is the lowest level since November 2024. This decrease indicates a significant decrease in available positions, which may be caused by long liquidations or traders closing positions amid the recent price decline, said CryptoQuant in its latest analysis.

When OI reaches such lows, the market is vulnerable to volatility from long or short compression, as much of the speculation has been wiped out. CryptoQuant pointed out that this “reset” in the derivatives market often sets the stage for a stable trend.

With liquidation pressure reduced, future price movements are less likely to be exaggerated due to very high positions. If spot demand increases, supported by high on-chain activity, the price of XRP may naturally recover. Analysis shows that this “clean slate” can create conditions for a meaningful trend reversal, and the derivatives market is set to respond more calmly to new buying or selling pressure.

Full Reset Section

Similar signs appear in technical momentum indicators. Crypto analyst Egrag Crypto said that the XRP strength index (RSI) fell to the 45-50 level faster than he expected, a level that historically precedes sharp price declines.

The analyst noted that although inflation appears to be aggressive, the selling pressure does not appear to be driven by sales but reflects the distribution of large owners during the cash sweep. Egrag Crypto emphasized that this RSI behavior is not a beach, while describing it as a “full reset phase” following the RSI peak close to 80.

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He added that the 45-50 range has served as a major support throughout the past XRP cycle and has never been breached. According to the analyst, this pressure usually releases weak hands, resets the pressure, and is followed by an extension. He said this structure will only change if the RSI falls below around 43.

As for institutional appetite, US-listed XRP ETFs attracted $19.46 million in inflows as of February 3, according to SoSoValue. The XRPZ Franklin XRP ETF topped the chart with $12.13 million in revenue, followed by the Bitwise fund with $4.8 million and the Grayscale XRP Trust ETF with $2.51 million. By comparison, Bitcoin ETFs recorded $272 million in total outflows, while Ethereum ETFs attracted nearly $14 million, leaving XRP funds as the relative outperformers.