Key Insights:
- XRP is facing downward pressure with a 1.3% drop in the past day, continuing a week-long trend of weakness.
- Negative funding rates and growing short interest point to a bearish outlook, pushing XRP towards key support levels.
- On-chain activity has surged, with XRP’s velocity hitting its highest point of the year, reflecting increased token movement.
XRP’s price is approaching a critical support level, showing signs of further weakness amid increasing short positions and declining market activity. The digital asset has faced consistent downward pressure, trading at $2.13 after slipping 1.3% over the past 24 hours. This marks a continuation of its struggle over the past week, with XRP seeing a 3.5% drop. Currently, it is trading nearly 40% below its July high of $3.65.
Negative funding rates have added further pressure on XRP, with short interest surpassing long positions. CryptoQuant data shared by contributor PelinayPA on December 3 reveals that funding rates have remained negative for several days. The prevailing sentiment in the market is bearish, with many traders opting for short positions rather than long ones. This trend is reflected in the price action, where upward movements have been capped, and conviction from buyers remains weak. Consequently, XRP’s price has struggled to gain traction, as most traders are reluctant to build long positions.
On-Chain Activity Shows Surge in XRP Velocity
Despite the price pressure, XRP has experienced a noticeable rise in on-chain activity. The XRP velocity reached its highest level this year on December 2, with the metric hitting 0.0324. This indicates an active and fast-paced circulation of the token, with both traders and whales moving XRP at an accelerated rate. The increased movement suggests that although the price is under pressure, there is considerable activity occurring on the network.
XRP’s technical chart paints a bearish picture, as the asset continues to trade below key moving averages. The 50-, 100-, and 200-day moving averages are all above the current price, signifying weak momentum. Furthermore, the 20-day moving average, which often acts as a near-term trend indicator, remains below the price, preventing any signs of a bullish reversal. With volatility easing and the price hovering near the middle Bollinger Band, the next support level appears to be near $2, with the potential for a deeper slide towards $1.90 if bearish pressure continues.
XRP Faces Resistance and Potential Downside Risks
Resistance levels lie between $2.25 and $2.35, and XRP has struggled to break above these points, indicating that upward momentum remains fragile. Should the price dip below $2, further short interest could be triggered, pushing the price lower. Conversely, if XRP manages to break above $2.35, this could signal a shift in momentum, although such a scenario appears unlikely at this time given the current market conditions.
