XRP traded near $1.34, as accumulation increased despite bearish derivatives pressure. On-chain and derivatives data now show a clear divergence, signaling rising volatility risk.
CryptoQuant analysts Darkfost and PelinayPA highlight growing accumulation alongside dominant short positioning. Traders now face a potential breakout or short squeeze scenario.
An XRP Accumulation Trend
According to CryptoQuant analyst Darkfost, there is a continued rise in the XRP accumulation trend. Darkfost states that the price of XRP has been confined to the $1.30 and $1.50 area for some time.
According to the same analyst, while the overall crypto market is experiencing declining activity, the amount of on-chain activity is actually trending upward. He inferred that the number of investors accumulating XRP in anticipation of future growth exceeds those actively speculating based upon short-term trends.
A larger-than-normal number of withdrawal transactions were made from Binance during the last week of February. The majority of the trades were conducted by investors who purchased between 1,000 and 100,000 XRP tokens, representing mid-tier investors.
Thus, the accumulation represented long-term commitment by investors rather than speculative investment activity.
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Bearish Derivative Trends Remain
Despite evidence indicating an accumulation trend for XRP, derivative trends continue to demonstrate bearish tendencies. According to CryptoQuant analyst PelinayPA, funding rates for all derivative contracts have remained extremely low.
Funding rates spiked from -0.01% to -0.02%. These funding rate spikes represent extreme dominance by shorts, and longs receiving funding payments indicate bearish sentiment.
As noted by PelinayPA, XRP’s decline is primarily driven by pressures from derivatives markets rather than direct selling from holders. Data showed that there were $2.66 million in net inflows into XRP ETFs between March 23rd and March 27th.
These investments demonstrate that institutions remain interested in this coin. Due to the disconnect between inflows and positioning trends, a short squeeze is increasingly likely.
Compression Trend Continues
Trading data provided by TradingView illustrates that the token has continued to trade in an extremely small range. A compression exists in price action since neither side of the bulls nor bears has asserted control over price direction.
Lower highs continue to form while support near $1.30 and resistance levels remain stable. The lower highs developed as a result of increasing pressure and could lead to either a breakout or a breakdown.
Volatility Risks Increase
CoinGlass reports that the volume associated with XRP derivatives trading has risen nearly 92% to reach $3.36 billion over the last 24 hours. An increase in traded volume signals a rise in market participation and subsequently greater focus on the asset.
In contrast to traded volume, open interest related to derivatives trading has remained virtually unchanged during the same timeframe. The coin does not appear to possess a clear directional bias.
If price increases while funding rates remain negative (as they currently do), shorts may be forced to close positions. This creates an upward momentum in the short-term.
This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
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