Market participants liquidated $500M worth of XRP holdings within two days as bullish sentiment wanes.
CME Group's clarification regarding XRP futures contracts triggered increased selling pressure among short-term holders.
Technical analysis suggests XRP may test support at $2.62 if current support levels fail to hold.
The meme coins websitedigital asset market witnessed XRP underperforming on Friday with a 3% price drop, as multiple technical and on-chain metrics indicate decreasing buying pressure. This development comes despite the broader market optimism following recent US regulatory developments regarding digital assets.
Profit-Taking Activity Reaches $500M as Short-Term Holders Exit Positions
Market observers noted an interesting divergence where XRP failed to capitalize on the positive sentiment generated by recent US presidential actions regarding cryptocurrency regulation. The lack of upward movement appears connected to derivative market developments, particularly concerning potential XRP futures products.
Analysts point to recent statements from CME Group regarding XRP futures as a contributing factor to the current market dynamics. The clarification that no definitive plans exist for XRP futures contracts appears to have dampened enthusiasm among certain market participants who had anticipated such developments.
This sentiment shift manifested in substantial profit-taking activity, with blockchain data revealing approximately $500 million worth of XRP being moved to exchanges for liquidation over a 48-hour window. The timing coincides with increased dormant token circulation across multiple timeframes, suggesting both short and medium-term holders participated in the selling activity.
Derivative market metrics further confirm the changing sentiment, with XRP's open interest declining from record highs observed earlier in the week. The reduction in outstanding contracts typically indicates traders are reducing their exposure or closing positions entirely.
Interestingly, spot market flows present a more nuanced picture, with certain major exchanges experiencing net outflows while others saw inflows. This divergence suggests market participants may be repositioning rather than exiting the asset class entirely.
Technical Indicators Flash Warning Signs for XRP Bulls
Market data reveals significant liquidation activity in XRP markets, with long positions accounting for the majority of liquidated contracts. This aligns with recent price action that saw XRP form a doji candlestick pattern - typically interpreted as signaling potential trend reversals when occurring after sustained moves.
The subsequent price decline appears to validate concerns about weakening bullish momentum, with multiple technical indicators now showing decreasing strength. Both the MACD and Awesome Oscillator display concerning patterns that historically precede pullbacks, with consecutive lower highs forming despite remaining in positive territory.
From a technical perspective, the $2.90 level emerges as critical support. A sustained break below this threshold could open the door for a test of the 50-day moving average near $2.62, representing approximately 20% downside from current levels. Conversely, overcoming the descending trendline resistance established in mid-January could invalidate the bearish scenario and potentially catalyze new highs.
Market participants will closely monitor whether current support levels hold, as the outcome could determine XRP's near-term trajectory. The coming days may prove decisive in establishing whether recent developments represent a healthy consolidation or the beginning of a more substantial correction.
