Ripple (XRP) is trading under pressure and is holding the $2.00 support level at the time of writing on Friday. The path of least resistance appears to be to the downside due to a decline in retail demand despite modest inflows into XRP spot exchange traded funds (ETFs).
The extended outlook of the crypto market indicates growing uncertainty, evidenced by a lack of investor confidence. The Crypto Fear and Greed Index is at 27 on Friday, confirming that investors are concerned.
Despite the index rising to 55 on Tuesday, the market failed to regain strength, leading to a continued correction. If sentiment fails to improve, XRP could extend the correction to $2.00 and possibly the December low of $1.77.
XRP struggles as retail demand remains weak
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Coinglass data shows that OI, representing the notional value of outstanding futures contracts, decreased to $4.15 billion on Friday, indicating that retail demand is softening. The continued decline in OI suggests that traders are losing confidence in XRP, making the price vulnerable to selling pressure.
As retail demand slowly subsides, institutional interest is back on track, as seen with inflows of nearly $9 million into the XRP spot ETF on Thursday. The ETF broke its record for steady inflows on Wednesday, with outflows totaling $41 million on the day, SoSoValue data shows. The resurgence of inflows could be a sign that institutional interest in US-listed ETFs will continue.
XRP Technical Outlook: XRP enjoys major support as risk-off sentiment persists
XRP is trading at $2.10 at the time of writing on Friday as investors increase risk aversion. The 100-day exponential moving average (EMA) limits gains at $2.22, while the 200-day EMA at $2.34 remains just below the descending trend line that has been hindering a breakout since the record high of $3.66 in July.
The Relative Strength Index (RSI) at 54 on the daily chart is continuing its decline from the overbought zone, indicating that the bullish momentum is faltering.
Conversely, traders may consider taking risks, given that the Moving Average Convergence Divergence (MACD) indicator has maintained a buy signal since January 1, which could prevent a decline below the 50-day EMA at $2.07.
A sustained breakout above the 100-day EMA and 200-day EMA resistance cluster at $2.22-$2.34 could increase the chances of XRP moving above the descending trendline towards the $3.00 level.
Crypto ETF FAQ
An exchange-traded fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can track not just a single asset, but also groups of assets and sectors. For example, a Bitcoin ETF tracks the price of Bitcoin. An ETF is a tool that investors use to gain exposure to a certain asset.
Yes. The first Bitcoin futures ETF in the US was approved by the US Securities and Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still awaiting regulatory permission. The SEC says the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the past few years.
Yes. The SEC approved the listing and trading of several Bitcoin spot exchange-traded funds in January 2024, opening the door for institutional capital and mainstream investors to trade the main cryptocurrency. The industry described this decision as a game changer.
The main advantage of crypto ETFs is the possibility of exposure to cryptocurrencies without ownership, thereby reducing the risk and cost of holding assets. Other advantages are a lower learning curve for investors and higher security as ETFs take charge of securitizing the underlying asset holdings. As far as the main drawbacks go, the main drawback is that as an investor you cannot have direct ownership of the asset, or, as they say in crypto, “not your keys, not your coins.” Other disadvantages are the high costs associated with holding crypto because ETFs charge fees for active management. Finally, even though investing in an ETF reduces the risk of holding the asset, price fluctuations in the underlying cryptocurrency are likely to be reflected in the investment vehicle as well.
