XRP Bears Take Control as Open Interest Collapses by Over 50%

XRP (XRP), the cryptocurrency linked to Ripple, has dropped by approximately 28.5% from its Jan. 16 high of $3.40 (Bitstamp data) to around $2.42 as of Feb. 10.

The crypto’s decline appeared primarily due to Donald Trump’s delay in delivering a decisive pro-crypto plan—particularly regarding the SEC vs. Ripple case—and his latest tariff war with China, dampening risk-on sentiment overall.

XRP Open Interest and Funding Rates Signal Bearish Sentiment

The sharp price correction has triggered a 52% drop in XRP futures open interest, which has fallen from a peak of $7.62 billion on Jan. 17 to a monthly low of $3.52 billion.

Open interest represents the total number of outstanding futures contracts. A sharp decline suggests that traders are exiting their positions, indicating waning confidence in XRP’s short-term prospects.

Additionally, as of Feb. 10, XRP funding rates had turned negative.

Negative funding rates mean traders holding short positions (betting against XRP) pay fees to those in long positions, reflecting bearish sentiment.

Furthermore, the derivatives market has seen a wave of long liquidations since XRP’s Jan. 16 peak, including the collapse of $74.67 million of bullish bets during the Trump-led global market rout on Feb. 3.

This means bullish traders using leverage were forced to exit their positions as the price dropped. The scale of the liquidations suggests an overwhelming shift in market sentiment toward bears, adding to the downward pressure on XRP.

XRP Technical Analysis Raises 30% Decline Risks

Technical analysis further strengthens the bearish case for XRP.

The XRP/USD chart reveals a bear pennant pattern, a classic bearish continuation setup. This pattern consists of a steep decline (flagpole) followed by a consolidation phase (pennant), usually leading to another downward move, whose target is typically at length equal to the flagpole’s height.

If XRP breaks below the lower trendline of this pattern, it could confirm a continuation of the bearish trend, potentially pushing the price toward $1.63, down about 30% from the current price levels, by March 2025.

Conversely, reclaiming the 50-4H exponential moving average (EMA) near the $2.52 level as support will likely invalidate the bearish continuation setup. Instead, the price may attempt a further rebound toward the 200-4H EMA (the blue wave) target at around $2.68 by March 2025.

XRP’s neutral relative strength index (RSI) supports these conflicting scenarios, showing ample room for growth and declines in the coming weeks.

In a separate analysis, X-based market analyst AgentXBT showed highly oversold RSI on the daily charts, which, coupled with a negative reading on the MACD divergence, suggests more downside ahead.

“Key level to watch is $2.31 S1 support,” he noted, citing the chart below.

SEC vs. Ripple News: A Pro-XRP Update To Notice

Internal shifts within the SEC have fueled speculation about potential changes in the agency’s approach to cryptocurrency regulation.

Notably, the reassignment of Jorge Tenreiro, the SEC’s Chief Litigation Counsel who played a pivotal role in the Ripple lawsuit, to the agency’s IT department has been interpreted by some as a sign of a possible strategic pivot.

This has led to conjecture that the SEC might opt to withdraw its ongoing appeal against Ripple.