XRP Faces Bearish Pressure as Short Positions Dominate Market
Data indicates that the long/short ratio for Ripple (XRP) is currently at 0.9205, revealing that more traders are predicting a decline rather than an increase. This ratio has consistently remained below 1 for nearly two weeks, signifying a dominating bearish sentiment in the market.
Although open interest has decreased by 1.92%, derivatives volume surged by 35% to $3.28 billion, indicating persistent trading activity, mainly in short positions, as traders anticipate further downward movement.
On a technical level, XRP is trading at $2.14, just above a significant support level of $2.05. A breach of this key level could lead to severe short-term declines. The relative strength index stands neutral at 47 but is trending downward, suggesting potential room for additional decline.
The moving average convergence divergence has recently turned negative, indicating growing downside momentum. An average directional index reading of 11 reflects minimal trend strength, suggesting only choppy, sideways action rather than a strong directional movement. Moreover, numerous short- and medium-term moving averages are signaling sell trends.
A potential significant price shift may be on the horizon, as evidenced by narrowing Bollinger Bands. This squeeze coincides with XRP testing its support level, indicating that a decline rather than a recovery may be more probable.
Despite the bearish short-term outlook, XRP’s fundamentals remain robust. A major regulatory hurdle has been cleared with Ripple resolving its legal issues with the Securities and Exchange Commission. Additionally, interest in a potential spot XRP exchange-traded fund is rising, with analysts predicting an 85% chance of approval by late 2025.
Such ETF approvals could enhance institutional demand, driving prices higher. Ripple’s recent $4-5 billion bid to acquire stablecoin issuer Circle—despite being unsuccessful—demonstrates the company’s ambitious growth strategy.
Macroeconomic factors continue to pose challenges. Market sentiment is influenced by President Trump’s tariff policies and persistent inflation. The Federal Reserve’s interest rate decision on May 7, alongside the CPI data release on May 13, is also crucial, as these factors could significantly affect cryptocurrency asset movements, including XRP.
If XRP falls below $2.05, it may decline towards the $1.98–$2.00 range, where a 200-day support level resides. However, if XRP can recover from this range and climb back above $2.20, it may reverse the current momentum. As it stands, market conditions do not favor such a move.
