Ripple Price Forecast: XRP risks extending decline amid extreme fear sentiment, rising uncertainty

XRP eyes relief rally amid historical FUD levels

XRP is facing historically high fear, uncertainty and doubt (FUD) levels, according to Santiment’s analysts, who believe that “when bullish comments get replaced by this level of bearish ones, the probability of a relief rally climbs significantly higher.”

Investors appear to have retreated to the sidelines, following XRP’s roughly 64% drawdown from its record high of $3.66, reached in July. Persistent bearish sentiment tends to create opportunities for investors to reenter the market at lower price levels, increasing the likelihood of a sustained recovery.

Meanwhile, retail demand for XRP derivatives continues to fade, as futures OI averages $2.38 billion on Monday, down from to $2.48 billion the previous day. The OI surged to $10.94 billion in July, coinciding with the price rallying to an all-time high of $3.66.

Notably, the persistent decline in the OI suggests that investors are losing conviction in XRP’s ability to sustain recovery and are unwilling to open new positions.

Technical outlook: XRP holds steady, but gains remain constrained

XRP trades at $1.32, maintaining a bearish near-term bias as price holds beneath the 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs) at roughly $1.41, $1.56, and $1.81, respectively.

The persistent cap from this stacked moving band and the broader descending trendline resistance near $1.74 suggests rallies remain corrective. At the same time, the Relative Strength Index (RSI) is hovering around 43 on the daily chart, suggesting subdued buying interest, while the Moving Average Convergence Divergence (MACD) line and the signal line remain slightly below the neutral level, with a marginally positive histogram.

On the topside, XRP's initial resistance is seen at the 50-day EMA at $1.41 with further barriers at the 100-day EMA around $1.56 and the descending trendline near $1.74, before the longer-term 200-day EMA at $1.81 comes into play. With no clearly defined major moving-average or structural supports immediately below the spot in this dataset, any fresh downside extension would leave the remittance vulnerable to discovering new demand levels below the $1.30 threshold unless buyers can quickly reclaim the 50-day EMA and reduce the weight of the prevailing downtrend.

Open Interest, funding rate FAQs

How does Open Interest affect cryptocurrency prices?

Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.

How does Funding rates affect cryptocurrency prices?

Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.

(The technical analysis of this story was written with the help of an AI tool.)