Altcoin Investors Run Away: XRP Futures Open Interest Analysis

XRP Futures Open Interest Plunges 37% as Traders Reduce Leverage

In the week before February 6, XRP experienced a steep 25.7% fall. However, each time it was tested, substantial buying activity surfaced at the $2.30 support level. XRP recovered with a daily gain of 8% on February 7 and briefly hit $2.50. Professional traders have been cautious and have drastically reduced their leveraged positions in spite of this comeback.

The 37% drop in XRP futures open interest since its peak on January 15, which indicates decreased demand for these contracts, is a crucial symptom of this change. Since long and short positions are always balanced, a decline in open interest does not always mean that the market is less active. Since additional liquidity tends to draw in more capital and improve price stability, the increasing participation of institutional investors may offset this trend. Though the lack of excitement in the derivatives market begs the issue of how strong the current rebound is, overall, XRP’s price behavior points to a potential bottom formation at $2.30.

XRP Army Losing Momentum? Perpetual Contracts Show Signs of Weakness

When examining the XRP futures data, two important situations become apparent. First, following the flash fall to $1.76 on February 3, the premium swiftly recovered the 5% neutral barrier. More significantly, despite XRP being 25.5% off its peak of $3.40, the yearly futures premium has risen back to the optimistic 10% threshold.

Nonetheless, retail trade has a significant impact on XRP. On websites like Binance, Bybit, and Bitget, the total open interest in perpetual contracts, also known as inverse swaps, is close to $2.5 billion. The futures financing rate, which normally surpasses 1.9% each month in bullish markets, should be examined to determine whether the so-called XRP army is weakening.

The funding rate for XRP perpetual contracts is currently 0.2% per month, which is close to negative territory and at the lower end of the neutral range. This is still far lower than the 0.9% recorded two weeks ago, even though it represents an improvement above the level seen on February 3. This indicates a lack of optimism among retail traders from the standpoint of derivatives.

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