Analysis of the recent XRP price alongside the Open Interest indicated a leveraged pump, as seen in the explosive growth of OI change that was accompanied by a sharp increase in price.
Leverage, specifically derivatives trading leverage, is what amplifies gains and losses.
While leveraged long positions are being built up by traders, an increase in OI would typically fuel price momentum.
Over-leverage also leads to liquidations, which bring violent corrections.
After the March 2 top, XRP price saw a quick correction, as per the trend of leverage-assisted price pumps reversing through liquidations.
Price then fell down to $2.1 with a quick drawdown. OI fluctuations during that period showed volatility persisting.
In the event of leverage ongoing, XRP can try to rise up to $2.5 again, but in the event of liquidation cascades coming into play, price will go below $2.2.
XRP Price Gathering Liquidity
Amid the heightening leverage, price of XRP trades in a tight $2 – $3 range during periods of market uncertainty which is a sign of liquidity accumulation before the price makes a substantial movement.
Past experience has indicated that breakouts of XRP out of areas of consolidation have led to strong impulsive rallies.
The large resistance zone at $3 that had been a large rejection zone in 2018 and 2021 is now being tested as support, a sign of structural strength.
A breakout above $3 can trigger a run-up to $5.5 – $7 in accordance with previous price extension after prolonged consolidation.
Falling short of holding this range, however, can take it down to $1.50, challenging previous support before a new thrust.
Price structure is a classic bullish retest, and on higher timeframes, trend is in the direction of continuation.
Breakout seems to be imminent if demand increases and XRP stays above $2.5.
However, losing support at around $2 can turn off bullish momentum, leading to lower retracements.
Total Number of XRP Addresses
Additionally, the all-time high of 6.87 Million XRP addresses indicates growing network adoption, a prelude to price strength.
There has been a consistent increase since February 7, when the addresses were 6.68 million, with significant spikes on February 17 and February 25.
The count crossed 6.82 million on March 1, an unmistakable upward trend. This echoed XRP’s price action. A $2.80 price spike was paired with a spike in new addresses.
This was an indication that network activity correlates with price movements although that is not certain in all cases.
Then, when addresses flattened out at approximately 6.86 million at the beginning of March, price pulled back to $2.10, which indicates short-term sell-offs.
Historically, price action is supported by address growth over time, which means XRP can return to $2.80 – $3.00 if adoption continues.
In case address growth slows down, price can consolidate at $2.20 before another push higher.
