XRP halts rally despite futures and ETF inflows rising
Ripple (XRP) is trading down to $2.15 at the time of writing on Wednesday after posting a brief rally the previous day. The uptrend, fueled by improved market sentiment after the US reported lower-than-expected core inflation in December, reached $2.19 before the ongoing correction.
  • XRP uptrend takes a breather below resistance at $2.21 while the 50-day EMA offers support at $2.08.
  • The derivatives market shows strength, with futures Open Interest rebounding to $4.19 billion.
  • XRP ETF recorded $13 million in inflows on Tuesday, led by Grayscale’s GXRP.

Ripple (XRP) is trading down to $2.15 at the time of writing on Wednesday after posting a brief rally the previous day. The uptrend, fueled by improved market sentiment after the US reported lower-than-expected core inflation in December, reached $2.19 before the ongoing correction.

Retail and institutional investors drive XRP demand

Retail interest in XRP is rising again, as reflected in futures Open Interest (OI), which averages $4.19 billion on Wednesday, up from $3.93 billion the previous day. The increase, albeit minor, suggests that investors are beginning to lean more into risk.

If this trend continues in the OI, representing the notional value of outstanding futures contracts, XRP could regain momentum to push for a short-term breakout toward $3.00.

Still, the OI sits below the yearly high of $4.55 billion, recorded on January 6, underscoring the need for traders to temper their expectations in the short term.

XRP Futures Open Interest | Source: CoinGlass

Meanwhile, interest in XRP spot Exchange Traded Funds (ETFs) continues to build, as SoSoValue reports nearly $13 million in inflows on Tuesday. Since their launch in November, XRP ETFs have recorded just one outflow, totaling nearly $41 million on January 7. The cumulative inflow now stands at $1.25 billion with net assets at $1.54 billion.

XRP ETF stats | Source: SoSoValue

Technical outlook: Can XRP resume its uptrend?

XRP is trading between a key support provided by the 50-day Exponential Moving Average (EMA) at $2.08 and the 100-day EMA at $2.21 at the time of writing on Wednesday.

The cross-border money remittance token is down over 1%, indicating early profit-taking after Tuesday's rally. A minor decline in the Relative Strength Index (RSI) to 57 on the daily chart confirms the buildup of downside pressure. If the RSI continues to fall, XRP could extend its correction toward the 50-day EMA.

XRP/USDT daily chart

Looking ahead, the Moving Average Convergence Divergence (MACD) indicator on the same chart holds above the signal line, which may prompt investors to increase their risk exposure.

The green histogram above the mean line should continue to expand, reinforcing bullish momentum and increasing the odds of a breakout. A close above the 100-day EMA at $2.21 could accelerate the uptrend toward the 200-day EMA ($2.33) and the descending trendline resistance.

Crypto ETF FAQs

An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.

Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.

Yes. The SEC approved in January 2024 the listing and trading of several Bitcoin spot Exchange-Traded Funds, opening the door to institutional capital and mainstream investors to trade the main crypto currency. The decision was hailed by the industry as a game changer.

The main advantage of crypto ETFs is the possibility of gaining exposure to a cryptocurrency without ownership, reducing the risk and cost of holding the asset. Other pros are a lower learning curve and higher security for investors since ETFs take charge of securing the underlying asset holdings. As for the main drawbacks, the main one is that as an investor you can’t have direct ownership of the asset, or, as they say in crypto, “not your keys, not your coins.” Other disadvantages are higher costs associated with holding crypto since ETFs charge fees for active management. Finally, even though investing in ETFs reduces the risk of holding an asset, price swings in the underlying cryptocurrency are likely to be reflected in the investment vehicle too.

Acuity Trading is a London-based fintech company founded in 2013 that specializes in AI-powered alternative data and sentiment analysis for trading and investments. They revolutionized the online trading experience by introducing visual news and sentiment tools, and today they continue to lead the fintech market with alpha-generating alternative data and highly engaging trading tools using the latest AI research and technology.
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