XRP experiences renewed trader activity as market absorbs selling pressure

CryptoQuant contributor BoriVest reported renewed trader activity in XRP derivatives on Binance. He argued that this indicates potential accumulation as markets absorb selling pressure amid increasing speculative interest.

The virtual asset is following the broader cryptocurrency market’s upward trend, gaining 21% within a week to cross the $150 billion market cap. At the time of publication on Wednesday, on-chain data showed that the digital asset was exchanging hands at around $2.58, a 3.08% increase in the past 24 hours.

On-chain data from Coinglass showed that XRP pulled back from Monday’s high, triggering massive liquidations totaling $35 million the day after. According to the analytics firm, longs accounted for the largest share of the liquidations, at $22.82 million, hinting at declining trader interest in the digital asset’s short-term price action.

XRP sees renewed trader activity as its open interest rebounds

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An analysis by CryptoQuant’s BorisVest showed renewed trading activity in XRP, indicating that markets are showing growing trader interest. The analyst also said that the crypto market is witnessing a resurgence in leveraged trading positions following a previous steep drop in open interest. He believes the digital assets’ on-chain dynamics may hint at a shift in sentiment as traders return after the previous market correction.

Data from CryproQuant showed that the virtual asset’s open interest had a sharp rebound from a previous $530 million low to a higher range. BoriVest said the data suggested a recovery in market confidence after a significant drop from its $1.5 billion peak.

The analyst also noted that Binance funding rates, which reflect the cost of maintaining long or short positions in perpetual futures, were turning positive, meaning long positions dominated the market. BoniVest stated that the Binance funding rates turned negative during the virtual asset’s recent correction. He argued that it indicated an influx of short positions and set conditions for a possible short squeeze. 

The analyst said a short squeeze occurs when short sellers are forced to buy back positions due to rising prices, resulting in rapid upward price movements. CryptoQuant noted that the current funding rate is neutral, suggesting an equilibrium between bullish and bearish positions. 

XRP’s selling pressure dominates the market

The analyst noted that XRP’s Taker Buy/Sell Ratio currently stands at 0.91, suggesting that selling pressure dominates the market. He also argued that the absence of significant price declines despite the digital asset’s selling pressure implied potential absorption by larger players, signaling a precursor to bullish price movements.

According to CryptoQuant, the rising open interest, neutral funding rates, and sustained price levels despite the virtual currency’s selling pressure suggest that it may be experiencing silent accumulation. The analytics firm added that as the virtual currency remains indecisive, its open interest patterns are often observed in the early stages of a trend reversal or breakout.

Glassnode data showed that XRP futures open interest increased by more than $10 billion in the past week. The crypto’s futures open interest rose by 41.6% from $2.42 billion to $3.42 billion. The surge coincides with the digital asset’s recent price rally, suggesting elevated speculative activity and growing buying pressure.

XRP issuer Ripple has faced troubles with the U.S. Securities and Exchange Commission (SEC), and the agency sued the company in 2020, alleging it was in breach of financial securities laws. Ripple’s legal battle was ongoing until last week when the agency agreed to settle the case in line with U.S. President Donald Trump’s promise to run a pro-crypto administration.

The SEC also announced on May 8 a reduction in Ripple’s August 2024 $125 million fine to just 50 million, effectively extinguishing the rest of the case.

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