XRP struggles to hold support amid bearish indicators
XRP, currently trading at $2.33, is showing signs of vulnerability as it hovers near critical support levels. The cryptocurrency has rebounded over 45% since its April 7 low but still trades 31% below its January 2025 peak of $3.40. With key technical indicators flashing warning signs and a lack of institutional support, XRP risks a potential 16% decline to $1.96 if its 200-day Simple Moving Average (SMA) fails to hold.
The derivatives market shows bearish signs
The derivatives market is offering a cautious outlook for XRP. Funding rates, which reflect the balance between long and short positions in perpetual futures contracts, have hovered around 0% since February, suggesting a lack of strong conviction among traders. This neutrality often points to price stagnation or sideways movement in the absence of a significant market catalyst.
Additionally, XRP’s open interest (OI) in futures markets has dropped by 9.6%, falling to $3.2 billion from its three-month high of $3.52 billion recorded on May 13. Declining OI typically indicates weakening trader interest and lower capital flow, both of which make it difficult for an asset to sustain upward momentum. This decline in participation raises concerns that even minimal selling pressure could trigger a wave of liquidations, particularly from over-leveraged positions.
Institutional appetite for XRP declines
Investor sentiment is further dampened by notable outflows from XRP-related investment products. According to CoinShares, XRP-based exchange-traded products (ETPs) experienced weekly outflows totalling $37.2 million, breaking a steady inflow streak that lasted 80 weeks. The month-to-date net outflow now stands at $28.6 million.
This contrasts sharply with inflows into other major digital assets, with Bitcoin, Ethereum, and Solana seeing institutional investments of $2.9 billion, $326 million, and $4.3 million, respectively, during the same period. The withdrawal from XRP investment products suggests a significant cooling in institutional interest, which could act as a further drag on price performance.
Descending triangle pattern signals downside risk
Technical analysis of XRP’s four-hour chart reveals a descending triangle pattern forming since May 14. This bearish formation is characterised by a flat support base and a downward-sloping resistance line, typically indicating a reversal following an uptrend.
The 200-day SMA, currently at $2.31, is under pressure. Should XRP fail to maintain support above this level, the price could slip to the triangle’s base at $2.28. If that level is breached, XRP could fall further to its downside target of $1.96, a 16% decline from current levels.
This bearish setup is in line with earlier forecasts that warned of a potential drop to as low as $1.61 if key support zones fail to hold.
Outlook: cautious optimism if key resistance breaks
Despite the prevailing bearish outlook, a glimmer of hope remains for XRP bulls. If the price manages to break above the triangle’s resistance line at $2.35, coinciding with the 50-day SMA, the structure would be invalidated. A confirmed breakout could pave the way for a bullish rally toward the psychologically important $3.00 mark.
Until then, however, the lack of momentum in both retail and institutional sectors, coupled with weakening technical support, places XRP in a precarious position heading into the end of May. Investors are advised to watch support and resistance levels closely, as a break in either direction could dictate XRP’s short-term trajectory.
