The XRP rally, ignited by a favorable court ruling in its battle against the Securities and Exchange Commission (SEC), has hit a speed bump. The cryptocurrency, which surged to new monthly highs, is now experiencing a significant correction as market sentiment shifts.
A key indicator of market interest, open interest, has plummeted by nearly 10%, signaling a decline in investor confidence. This drop coincides with a surge in liquidations, as traders who had bet on XRP’s continued ascent were forced to unwind their positions. The total value of liquidated long positions has reached a substantial $1.3 million in recent hours.
The initial euphoria following the court’s decision, which determined that XRP sales to institutional investors were indeed securities transactions but those to the general public were not, has waned. While the ruling marked a significant victory for Ripple Labs, it failed to sustain the upward momentum for XRP.
Transaction volume has also taken a hit, plunging over 65%, indicating reduced trading activity. Despite this bearish trend, there are still bullish undercurrents in the market. The long-short ratio has increased, suggesting that more traders are optimistic about XRP’s prospects. However, the dominance of sellers in recent days has overshadowed this bullish sentiment.
Technically, XRP has encountered resistance at the $0.64 level, a key hurdle for bulls to overcome. A breakdown below the 23.6% Fibonacci retracement level has exacerbated the selling pressure, pushing the price down to $0.58.
While the bears are currently in control, the situation remains fluid. If XRP manages to hold above the 20-day Exponential Moving Average (EMA), there’s a possibility of a rebound towards the $0.64 resistance and potentially even higher. However, a sustained break below the 20-day EMA could signal further weakness and a potential retest of lower support levels.
The coming days will be crucial for determining the direction of XRP. Investors will be watching closely for any signs of renewed buying interest or further selling pressure.