Ripple’s XRP surged 30% in the early hours of Tuesday, marking a significant recovery from the recent crypto market downturn. While overall sentiment remains cautious, bulls are attempting to push the remittance-focused token past key resistance levels. If momentum continues, it could reclaim the $3.00 psychological mark and potentially set its sights on a new all-time high.
Ripple XRP Market Dynamics: A Closer Look at the Rally
Source: Sentiment
The latest surge comes amid a broader crypto market recovery following heavy selloffs triggered by macroeconomic concerns. Since the recent crash—sparked by Trump’s tariff announcements on Canada, Mexico, and China—XRP investors have booked nearly $2 billion in realized profits over the past three days, marking one of the largest profit-taking events in its history.
On-chain data reveals that whale investors have been at the forefront of this volatility. Both long-term and short-term holders offloaded large amounts of XRP, as evidenced by spikes in whale transaction counts and Dormant Circulation metrics. This selling pressure led to its Weighted Sentiment—a key indicator of market mood—plummeting to levels last seen in November.
Funding Rates Signal Market Sentiment Shift:
Source: Sentiment
XRP’s funding rates—which track periodic payments between futures traders to keep derivative prices aligned with spot prices—fell to their lowest levels since August. Negative funding rates typically indicate that short sellers are dominating, which often precedes a price reversal.
Historically, when sentiment becomes overly bearish, prices tend to move in the opposite direction as markets correct. This may explain in why it has staged a strong comeback, gaining over 30% in the past 24 hours.
Source: Coinglass
However, despite the price jump, open interest in its futures remains subdued. Open interest—measuring the total number of outstanding derivative contracts—dropped from 2.05 billion XRP to 1.50 billion XRP, indicating that investors are still hesitant to open large leveraged positions. A resurgence in open interest could signal renewed confidence among traders and further fuel its rally.
XRP Battles for a Breakout Above $3.00:
Source: XRP/USDT daily chart
XRP faced a sharp decline below the $2.00 psychological level on Monday, triggering $103 million in futures liquidations—its highest single-day liquidation event in the current market cycle, according to Coinglass data.
Out of this liquidation, long positions accounted for $74.67 million, while short positions saw $28.28 million in losses. This suggests that many traders were caught off guard by the volatility.
With the market recovering, it is eyeing a move back above $3.00. A successful breach could set the stage for a rally toward its seven-year high resistance at $3.40. However, XRP must first contend with a descending trendline resistance that has been in play since January 16.
Should bulls break through this key level, the token could enter price discovery mode and potentially hit a new all-time high above $3.55.
Technical Indicators Favor Bulls:
From a technical perspective, momentum appears to be shifting in favor of the bulls.
- The Relative Strength Index (RSI) is trending upward, signaling increasing buying pressure.
- The Stochastic Oscillator (Stoch) has crossed above its neutral level, further reinforcing bullish momentum.
If these indicators continue to strengthen, XRP could see sustained gains, especially if market conditions remain favorable.
Conclusion: Will XRP Sustain Its Uptrend?
While XRP’s 30% surge signals a strong comeback, the market remains at a crucial juncture. To sustain the rally, bulls must reclaim the $3.00 level and push past the $3.40 resistance. Additionally, an increase in open interest and funding rates returning to positive territory would confirm renewed investor confidence.
If these conditions align, it could be on track for a new all-time high. However, traders should remain cautious of potential pullbacks, given the lingering uncertainties in the broader crypto market.
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