XRP slide as bearish derivatives data limits recovery

Key takeaways

• XRP has declined by more than 2% over the last few days.
• On-chain metrics indicate that sellers are currently dominating the XRP market.
• A long-to-short ratio of 0.83 and a negative funding rate highlight a prevailing bearish sentiment.
• The cryptocurrency is nearing important support at its 200-day EMA around $1.354.

Ripple (XRP) remained under pressure on Thursday, extending its weekly decline to over 2%. As the digital asset nears a pivotal support zone that could determine its next directional trend, a combination of active selling, cautious on-chain indicators, and mixed derivatives positioning suggests that short-term upward movement may be capped.

On-chain metrics signal bearish shift

According to market data from CryptoQuant, the near-term outlook for the asset warrants caution. XRP’s futures market is showing signs of overheating alongside clear sell-side dominance, with retail traders driving a portion of the current activity. Similar overheating patterns are visible in the spot market, even though several other technical indicators remain neutral.

Together, these developments point to a cautious and moderately bearish mood among XRP market participants.

Derivatives data also highlights contrasting sentiments between XRP and Stellar traders. On Tuesday, XRP’s long-to-short ratio dropped to 0.83, nearing its lowest point in a month. A ratio below 1 indicates that short positions outnumber long positions, reflecting expectations of further price declines among traders.

This bearish outlook is reinforced by the XRP funding rate, which turned negative on Wednesday and stood at -0.0012% on Thursday. In a negative funding environment, traders holding short positions pay those holding long positions, further emphasizing the bearish bias surrounding the token.

XRP approaches vital 200-day EMA support

XRP hovered near $1.392 on Thursday, down over 2% for the week. Despite this retracement, the token continues to trade above its 50-day, 100-day, and 200-day exponential moving averages (EMAs). Clustered between $1.244 and $1.354, these moving averages maintain a constructive underlying structure for XRP as long as they hold.

The Relative Strength Index (RSI) is currently in the mid-50s, indicating that while upward momentum has slowed, it has not completely disappeared. Conversely, the Moving Average Convergence Divergence (MACD) line remains below zero, pointing to weakening bullish strength.

On the downside, XRP’s immediate line of defense lies at the 200-day EMA near $1.354. A break below this level could expose horizontal support at $1.300, followed by the 50-day and 100-day EMAs, with $1.000 serving as the next major target for sellers.

To the upside, XRP faces a significant barrier near $1.900. Buyers will need to secure a daily close above this resistance level to revive robust bullish momentum and spark a sustainable recovery.

Until such a breakout occurs, declining derivatives demand and cooling momentum may keep XRP pinned near its key moving-average supports.