XRP Faces Risk of Severe Decline: Where Does the Cause Come From?

XRP is still trying to defend the support level of 2.74 USD. However, the pessimistic atmosphere enveloping the entire market is placing this cryptocurrency at risk of entering a deeper downtrend. CVD data on both the spot market and futures contracts has remained in a negative state throughout the past month, further reinforcing the negative outlook. Meanwhile, the open contract (OI) on CME has just recorded a record high – normally a signal for a breakout scenario. However, this time the upward momentum has yet to appear. According to Bitcoin Magazine, the capital allocation map indicates that the 2.8 USD region serves as a key threshold. The August low at 2.74 USD is seen as the last line of defense; if this level is breached, XRP could retreat further to 2.4 USD.

Technical signals are also leaning towards a negative scenario: the MFI indicator continues to decline, the price structure on the 12-hour frame shows a clear downtrend, while many other indicators agree with this gloomy picture. The Spot and Derivatives Market Shows Overwhelming Selling Pressure Since the end of July, the CVD index spot ( for a 90-day period ) has continuously maintained at a negative level. During the same period, XRP formed a strong short-term resistance zone at 3.4 USD – just below the historical peak of 3.65 USD established in July.

The negative CVD combined with declining trading volume clearly reflects the selling pressure that is dominating the spot market. Investors currently expect this trend to soon reverse before the important support area of 2.74 USD is breached. The pessimistic signals are becoming more pronounced as Bitcoin plummets below 110,000 USD, reinforcing concerns that the entire market is in a weakened state, forcing XRP holders to brace for the risk of deeper losses.

Similar to the spot market, the derivatives market also reflects persistent selling pressure. The CVD of futures contracts has been continuously negative over the past 90 days, indicating that pessimistic sentiment still prevails over XRP. The open interest data (OI) from Coinalyze further reinforces this observation as it records a downtrend that has lasted since late July, particularly weakening sharply in the past two weeks.

However, there is still a silver lining: the estimated leverage ratio (ELR) is going down. This proves that the market is not falling into a state of excessive leverage usage, thereby eliminating most of the risk of large-scale liquidation events. Overall, the outlook for XRP still leans towards a downtrend. As long as the price remains above the thresholds of 2.74 USD and 2.6 USD, the negative scenario can still be contained.