- XRP’s recent market gains have slowed significantly, with a 5.26% drop in the past 24 hours due to rising selling pressure.
- Active XRP addresses surged by 620% recently, but this growth has since reversed, signaling profit-taking by previous holders.
- Derivatives market metrics, such as the Open Interest Weighted Funding Rate, have turned bearish, indicating increasing selling pressure.
- Spot traders, particularly U.S. retail investors, are leading a major sell-off, contributing to XRP’s downward trend.
- If selling pressure persists, XRP could erase its monthly gains and push investors into losses.
XRP’s Market Momentum Stalls
XRP, which recently experienced a strong rally, is now facing a significant slowdown as selling pressure mounts. Over the past 24 hours, its gains have dropped by 5.26%, reflecting a shift in market sentiment. While the token had shown promise with its recent upward momentum, the current trend suggests that sellers are beginning to dominate the market.
This shift in sentiment could potentially be reversed if new market participants enter and hold XRP for the long term. However, the increasing selling pressure indicates that many investors are opting to cash out their profits rather than hold onto their positions. This behavior has created a challenging environment for XRP to sustain its recent gains, leaving the market in a precarious state.
The Role of Active Addresses in XRP’s Decline
Recent data revealed a dramatic surge in active XRP addresses, which grew by an astonishing 620% over the past few weeks. The number of active addresses jumped from 74,589 to a peak of 452,650, signaling heightened demand and activity within the XRP network. Such a surge typically correlates with increased buying interest, which can drive prices higher, as was observed during XRP’s recent rally.
However, this trend has since reversed. After reaching a new high on March 2, the number of active addresses has declined significantly. This drop suggests that many of the previously active XRP holders have sold their tokens, likely to lock in profits. The decline in active addresses is a bearish signal, as it indicates reduced participation and demand in the market. This shift has contributed to the growing selling pressure, further weighing on XRP’s price.
Bearish Signals in the Derivatives Market
The derivatives market has also shown clear signs of bearish sentiment, with key metrics pointing to increased selling activity. One such metric, the Open Interest (OI) Weighted Funding Rate, provides insight into market sentiment by adjusting funding costs based on open interest. A negative funding rate indicates that sellers are paying a premium to maintain their positions, while a positive rate reflects buying activity.
At its peak on March 3, the OI-Weighted Funding Rate reached 0.0103%, signaling strong buying pressure. However, this has since dropped to -0.0022%, indicating a shift toward selling dominance. The ratio of long to short positions has also fallen to 0.9798, below the critical 1.0 threshold, further confirming that a sell-off is underway. If trading volume in the derivatives market continues to decline, XRP’s losses could deepen, exacerbating the bearish trend.
Sellers in the derivatives market appear increasingly confident in a potential price drop. The Funding Rate has fallen further to -0.0098%, reflecting a growing willingness among sellers to pay a premium to maintain their positions. This gradual takeover by sellers underscores the challenges XRP faces in regaining upward momentum.
Spot Market Sell-Off Intensifies
The spot market has also seen significant selling activity, particularly from U.S.-based retail investors. Over the past 24 hours, major U.S. exchanges such as Coinbase and Kraken have sold a combined $34.68 million worth of XRP. In contrast, exchanges like Bybit and Binance have purchased $34.45 million worth of XRP, resulting in a net flow of $230,000 in favor of selling. This imbalance highlights the growing pressure on XRP’s price in the spot market.
The sell-off in the spot market has added to XRP’s downward trend, as more investors opt to liquidate their holdings. If this trend continues, XRP could erase its modest 0.90% gain from the past month, pushing many investors into losses. The behavior of top investors will be critical in determining whether XRP can stabilize or if further declines are on the horizon.
Conclusion: A Fragile Market Outlook
XRP’s recent rally has been overshadowed by mounting selling pressure, both in the derivatives and spot markets. While the surge in active addresses initially signaled strong demand, the subsequent decline suggests that many investors have taken profits, leaving the market vulnerable to further losses. Bearish signals in the derivatives market, coupled with significant sell-offs by spot traders, have created a challenging environment for XRP to recover.
If selling pressure persists, XRP risks erasing its monthly gains and pushing investors into negative territory. For a sustained recovery, the market will need renewed buying interest, particularly from long-term holders and larger investors. Until then, XRP’s outlook remains uncertain, with the potential for further declines if current trends continue.
