XRP at Risk: Derivative Actions Could Hinder $0.60 Breakout

The price of Ripple (XRP) increased by 10% between January 25 and January 30, although open interest in the futures markets stayed unchanged at about $380 million.

The price of XRP has increased by 10%, hitting $0.54 at press time on January 30 after hitting a local low of $0.49 on January 25. On the other hand, movements in the derivatives market indicate that futures traders have remained apprehensive about the cryptocurrency asset backed by Ripple.

Is the sixth-largest cryptocurrency poised for a breakthrough towards $0.60, or is it headed for another phase of correction?

XRP at Risk: Derivative Actions Could Hinder $0.60 Breakout
Source: U Today
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XRP open interest is unchanged despite increases in price.

The price of XRP has increased significantly in the spot markets during the last week. In the last week, there has been a 10% increase from $0.49 to $0.54, which has raised optimistic expectations of a possible rise towards $0.60. However, it’s noteworthy to note that patterns in derivative market data indicate that futures traders are not as upbeat.

The open interest statistics on Santiment monitors the amount of outstanding futures contracts for a certain cryptocurrency asset. Open interest is a useful metric for gauging investor involvement, liquidity, and market activity.

Source: Sentiment

The graph below illustrates how, despite a 10% increase in price between January 25 and 30, XRP open interest decreased little, from $386.7 million to $380 million over that time.

The price increase and open interest are not in line, indicating that futures traders are positioning themselves for an impending pullback.

Price gains indicate that traders are taking advantage of the recent price rebound to lock in profits, as does open interest that goes in the other way.

In the next days, the lack of capital and liquidity will probably cause an XRP price correction if investors keep liquidating their holdings.

The financing rate for XRP is likewise flattening.

Although there has been a decrease in XRP open interest due to the recent price bound, the funding rate patterns indicate that derivative traders are still inclined towards a flat price movement.

Is This New Altcoin a Better Buy Now That XRP Has Dropped 15% in a Month?

The cost that holders of perpetual futures contracts must pay to maintain their holdings is known as the funding rate. While negative numbers indicate that short traders are paying long position holders in the expectation of making more profits from a significant market decline, positive values indicate a bullish mood.

XRP Funding rate trends have not changed since the year began, despite being positive. The graph below shows that between January 2 and January 30, the XRP Funding rate decreased from 0.062% to 0.009%.

Put succinctly, traders who are bullish on XRP futures are paying 85% less than they were at the beginning of the year to maintain their long holdings.

A drop in the financing rate is a sign that optimistic traders are losing hope. In the absence of significant storylines or triggers that stimulate speculative trading in the XRP markets, traders who are long are paying less to maintain their holdings.

Not unexpectedly, there has been a 15% price reduction in XRP derivative markets this year at the same time as the financing rate decline.

XRP Price Prediction: Decline to $0.50 before to significant breakout phase
The drop in funding rates and open interest suggests that another corrective phase towards $0.50 is imminent for the price of XRP.

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