XRP risks extending losses as US-Iran war rages on

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Ripple (XRP) has come under pressure, drifting lower to $1.35 at the time of writing on Tuesday. The over 2% correction looks poised to erase the previous day’s gains, which lifted the remittance token to $1.42.

XRP declines amid a volatile crypto market, weighed down by risk-off sentiment due to the ongoing war in the Middle East.
Traders increasingly pile into short positions, with futures Open Interest-weighted funding rate falling to -0.0118%.
XRP’s pullback unfazed by steady inflows into US-listed spot ETFs.

Global markets remain on edge amid uncertainty due to the war between the United States (US) and Iran, which has since Saturday spread across several Middle East countries.

Despite calls for de-escalation of the conflict by global leaders, US President Donald Trump has warned that the war could last several weeks, according to a report by the Associated Press.

Sentiment across the crypto market remains in extremely fear as investors navigate geopolitical uncertainty.

Retail demand wanes amid uncertainty and risk-off sentiment

Interest in XRP is on the back foot, as evidenced by the futures Open Interest (OI) Weighted Funding Rate remaining in negative territory. At -0.0118%, the weighted funding rate suggests that the majority of leveraged participants are positioned expecting further downside. Besides, this scenario often snuffs out minor price rebounds, which are met with short selling or the liquidation of long positions.

However, prolonged periods of deeply negative OI-weighted sentiment may trigger a short squeeze, lifting XRP to higher levels or marking potential local bottoms.

XRP futures OI-Weighted Funding Rate | Source: CoinGlass

Despite escalating geopolitical tensions, institutional interest has remained intact, with US-listed XRP spot Exchange-Traded Funds (ETFs) recording inflows of approximately $7 million on Monday. Bitwise and Canary Capital’s ETFs accounted for all inflows, totaling $4.69 million and $2.28 million, respectively. Cumulative inflows stand at $1.25 billion, and net assets under management at $1.02 billion.

Technical outlook: XRP at risk of a deeper pullback

XRP hovers around $1.35 amid a strong bearish outlook. The price sits below a descending trendline resistance and trades below the 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs), clustered between $1.58 and $2.03, underscoring a dominant overhead supply zone.

At the same time, the SuperTrend at $1.61 remains well above spot and continues to track lower, keeping downside pressure intact. The Moving Average Convergence Divergence (MACD) remains marginally above its signal while green histogram bars contract on the daily chart, suggesting modest momentum. This outlook aligns with a corrective, rather than impulsive tone.

Meanwhile, initial resistance emerges at the trendline around $1.40, followed by Monday's high at $1.42. A daily close above $1.42 would open the way toward the 50-day EMA around $1.58 as the next upside barrier. On the downside, immediate support sits at Monday's low of $1.33, with a break exposing the February support at $1.12.

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.)