The price of XRP is approaching a significant support level as the market sees a rise in short interest alongside increased on-chain activity. Currently trading at $2.13, XRP has experienced a decline of 1.3% over the past day, marking a continuation of a week-long downturn that has seen it drop approximately 3.5%. This decline positions XRP around 40% lower than its peak of $3.65 reached in July.
Recent market data indicates a cooling trend in trading activity, with XRP spot volume decreasing by 27% to $3.41 billion. This reduction suggests that traders are becoming more cautious, leading to a slowdown in market momentum.
According to insights from CryptoQuant contributor PelinayPA, funding rates have remained negative for several consecutive days and are deepening into negative territory. The continued prevalence of short positions over long positions is contributing to the downward pressure observed in XRP“s price chart. Buyers have not shown strong conviction in building positions, limiting any upward movement.
PelinayPA also highlighted that this market setup increases the likelihood of XRP revisiting the $2 to $1.90 range. While a sharp short squeeze may not be imminent, further declines in funding rates could trigger a temporary rally towards the $2.25 to $2.35 range as short positions might be forced to close.
Moreover, a separate analysis from CryptoOnChain noted a significant increase in XRP velocity on December 2, reaching its highest level of the year at 0.0324. This uptick indicates a more active on-chain movement, suggesting that XRP is being utilized more intensively than in earlier months, with both traders and larger holders moving coins at a quicker pace.
From a technical perspective, XRP remains confined within a discernible downward structure on its daily chart. The price is currently situated below the 50-, 100-, and 200-day moving averages, signaling that momentum has yet to shift positively. Although the 20-day moving average is near the current price, it has not yet turned bullish, which implies that a substantial rebound is unlikely at this time.
Volatility appears to have diminished, as illustrated by the relatively narrow Bollinger Bands. The price has struggled to break above the upper band and is now hovering near the middle band. Should selling pressure persist, the next critical support level is positioned around the lower band, approximately $1.96.
Momentum indicators are presenting mixed signals; while the MACD is hinting at a potential bullish crossover, its strength remains weak, and the relative strength index is holding around 48, indicating a neutral stance. Key support levels are identified at $2 and then at $1.90, while resistance levels are noted at approximately $2.25 and $2.35. A decisive break above the upper band would be the initial indication of renewed strength, whereas a drop below $2 could trigger an additional wave of short selling.
