• XRP bulls target a break above $3.00, reflecting strong market sentiment.
• A steady increase in the futures Open Interest indicates increasing demand for XRP from retail investors.
• XRP exchange reserves surge, indicating investors’ readiness to sell as the price increases.

Ripple (XRP) is positioned marginally above $3.00 on Friday, as bulls push to extend the uptrend, aiming for the record high of $3.66 reached on July 18. The uptick in the XRP price over the past week reflects bullish sentiment in the broader cryptocurrency market, which has seen the Altcoin Season Index rise to 78, indicating the beginning of the long-awaited altcoin season.

XRP holds $3.00 as retail demand soars

Interest in XRP has been rising this week, evidenced by the futures Open Interest (OI) averaging at $8.51 billion, up from $7.37 billion recorded last Sunday. Although the OI, referring to the notional value of outstanding futures contracts, stands below the July peak of $10.94 billion, a steady increase suggests that risk-on sentiment is growing as traders pile into long positions.

XRP Futures Open Interest | Source: CoinGlass 

The futures-weighted funding rate is also rising steadily, averaging 0.0107% on Friday, which reinforces the positive market sentiment. This solid increase in OI, as shown in the chart below, implies that more traders are leveraging long positions in XRP, anticipating short-term price increases.

XRP Futures Weighted Funding Rate | Source: CoinGlass

Despite the surge in retail demand, investors should pay attention to the growth in XRP’s exchange reserves. According to CryptoQuant’s data, the balance of XRP on the Binance exchange currently stands at 3.66 billion coins, representing a 23% increase from approximately 2.8 billion tokens on August 31.

A persistent increase in exchange reserves often signals potential selling pressure, as traders deposit XRP on exchange platforms to either trade or liquidate their holdings. The immediate impact of higher exchange reserves is an increase in the available supply, which could push prices lower if demand fails to match it. 

Notably, the correction is unlikely to be immediate; hence, this is an on-chain metric worth monitoring, especially for risk-averse traders.

XRP Exchange Reserves | Source: CryptoQuant 

Technical outlook: What’s next as XRP holds critical $3.00 support

XRP is trading above $3.00 at the time of writing on Friday. A minor pullback from the intraday high of $3.07 suggests that profit-taking is underway. However, a buy signal from the Moving Average Convergence Divergence (MACD) has been maintained since Monday, supporting the bullish outlook for a breakout toward the next key resistance at $3.35, which was last tested in mid-August.

XRP/USDT daily chart

A closer look at the Relative Strength Index (RSI), which is currently at 55 and moving sideways, indicates a cooling of bullish momentum. If the RSI declines below the midline, XRP could extend the pullback below the $3.00 short-term support. 

Traders should keep an eye on the 50-day Exponential Moving Average (EMA) at $2.92, which could serve as the first key level of support. If instability rocks the XRP market, the 100-day EMA at $2.79 and the 200-day EMA at $2.54 could come in handy to absorb potential sell-side pressure.