Cuttlefish Priced at $0.60
The price of Ripple’s XRP token has experienced a 10% increase between January 25th and January 30th, reaching $0.54. However, despite this positive movement, the derivatives market has shown stagnant open interest, staying at around $380 million.
While the spot market has seen significant gains, with a 10% rebound from $0.49 to $0.54, data from the derivative market indicates that futures traders are not as optimistic. Santiment’s open interest data, which tracks the value of outstanding futures contracts, reveals a slight downward trend from $386.7 million to $380 million during this period.
This divergence between the price and open interest suggests that futures traders are preparing for a potential pullback. When the price rises but open interest decreases, it indicates that traders are taking advantage of the price increase to secure profits. If this trend continues, it could lead to a correction in the XRP price in the coming days.
In addition, the funding rate for XRP has remained flat, further supporting the notion of a flat price action. The funding rate represents the fee perpetual futures contract holders pay to keep their positions open. Despite being positive, the funding rate has decreased from 0.062% to 0.009% between January 2nd and January 30th. This decline in funding rate reflects a lack of optimism among bullish traders and has coincided with a 15% price drop this year.
Taking into account the decline in open interest and funding rates, it appears that XRP is on the brink of another correction phase towards $0.50. The Parabolic Stop and Reverse (SAR) technical indicator also indicates a potential reversal, with the SAR dot pointing to $0.57 while the current price is $0.54. Traders often interpret this as a sell signal, suggesting a possible downward trend.
If this prediction holds true, the bulls can find support at the psychological level of $0.50 to avoid margin call triggers. On the other hand, breaking above the resistance at $0.60 could negate the bearish forecast. However, the SAR dots indicate that $0.57 might serve as a bearish reversal point.
Overall, while XRP has seen price gains, the derivatives market signals caution among traders. A potential correction phase towards $0.50 may be on the horizon, unless the bulls can overcome resistance and push the price above $0.60.
