By Chris Hollingworth 
XRP (XRP) has shown signs of recovery from its recent low of $1.89 on March 11, although it is still trading below a key resistance level. The question on many investors’ minds is whether this upward momentum will be sustained or if XRP will face further declines in the near future.
One concerning indicator for XRP is the presence of negative funding rates and decreasing open interest in its futures markets. Funding rates are periodic payments made between long and short traders in perpetual futures contracts to keep prices aligned with the spot market. When funding rates turn negative, it indicates that bearish sentiment is prevailing in the market. Currently, XRP funding rates are below 0%, suggesting a bearish outlook.
Negative funding rates can discourage new buyers from entering the market as holding long positions becomes less profitable. If this trend persists, XRP may experience a significant decline as market confidence weakens. Additionally, the open interest in XRP futures markets has decreased from its peak in January, indicating that traders are exiting positions. Assets with declining open interest often struggle to maintain upward momentum, as capital leaves the market.
In terms of technical analysis, XRP’s price action on the four-hour candle chart has formed an inverted V-shaped pattern, signaling exhaustion in buying pressure. The price is currently facing strong overhead resistance in the $2.35 to $2.42 range, where the 100-period simple moving average and 200 SMA are located. The relative strength index (RSI) has dropped below 50, indicating sellers’ dominance in the market.
To prevent further downside, bulls need to hold above the 50 SMA and break above the supply zone at $2.35 to $2.42. Failure to do so could lead to a drop towards the neckline of the chart pattern at $2.01, with further support levels at $1.94 and $1.89. Crypto analyst Dark Defender remains optimistic about XRP’s recovery potential, citing a target of $5.85 for the altcoin.
In conclusion, while XRP has shown some signs of recovery, negative funding rates and declining open interest pose challenges for its price stability. Traders should closely monitor key support and resistance levels to gauge the future direction of XRP’s price movement.
