“Greater Risk of a Crash Than a Rebound” Overleveraged XRP Faces Warning of Further Declines

▲ Ripple (XRP)

XRP (Ripple) continues its downward trend from a peak of $3.50 to the $1.50 range, and despite the falling price, open interest has surged sharply, creating an unusual phenomenon that is raising market concerns. This suggests that speculative, leverage-driven capital rather than healthy spot accumulation is dominating the market, prompting warnings that if the key support level at $1.15 breaks, prices could plunge toward the psychological threshold of $1.00.

As of February 6 (local time), while XRP prices were declining, open interest in the derivatives market increased by about 12% over the past 24 hours. This rise in open interest is not a one-off spike but appears to have accumulated steadily, including during rebound phases in November and early January. Generally, increasing open interest during a price decline indicates the inflow of leveraged funds aiming for short positions or bottom fishing, rather than pure accumulation.

Experts note that such market conditions are amplifying vulnerability rather than stability. When leverage expansion, rather than spot demand, drives the market, volatility is more likely to intensify. Indeed, funding rates have recently shifted from neutral to slightly negative, meaning short position holders are paying long position holders, a sign that bearish sentiment has become excessively crowded.

Liquidation heatmap analysis shows a large concentration of liquidation orders on the upside between $1.35 and $1.45, while on the downside, long-position liquidations are clustered between $1.18 and $1.22. This represents an unstable structure where the potential for a short squeeze coexists with the risk of cascading long liquidations. If price direction is determined amid evenly matched leverage on both the buy and sell sides, sharp price swings could follow.

From a technical perspective, XRP is approaching a key support level while forming lower highs within a clear downtrend. After recently testing the 100% Fibonacci retracement support at $1.15, the price rebounded slightly to $1.29, but momentum remains insufficient to overturn the broader bearish structure. On the upside, XRP would need to reclaim resistance at $1.44 and the 78.6% retracement level at $1.39 to ease downward pressure and seek a potential trend reversal toward $1.73.

Ultimately, market attention is focused on whether the $1.15 support level can hold. If $1.15 breaks on a daily closing basis, market confidence could deteriorate rapidly, significantly increasing the risk of further declines toward the psychological support at $1.00. The current surge in open interest and negative funding rates warn that the market is highly exposed to volatility should the $1.15 level fail.

*Disclaimer: This article is for investment reference only, and no responsibility is assumed for any investment losses incurred based on this content. It should be interpreted solely for informational purposes.*

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