Ripple (XRP), one of the leading cryptocurrencies, is showing signs of weakness as its price struggles to maintain recent gains. After a failed attempt to break through a key resistance level, Ripple may be heading for a potential decline. On-chain data reveals bearish signals that could impact XRP’s price in the near future, making investors and traders cautious about its outlook.

Ripple’s Price Struggles at Key Resistance

Ripple’s price has been under pressure after it tested a significant resistance level at $0.626 but failed to break through. This key level has proven to be a formidable barrier, and Ripple’s inability to overcome it has led to a pullback. Following this failed attempt, XRP’s price dipped by 4.23% over the next two days, signaling that the market might be gearing up for a further decline.

As of Tuesday, Ripple’s price showed a slight recovery, trading up by 1% at around $0.593. However, this modest increase has done little to alleviate concerns about the overall bearish trend that seems to be taking shape. The market appears to be wary of further downside risks, and traders are closely monitoring the situation for any signs of a more significant drop.

Bearish On-Chain Data Raises Concerns

Adding to the concerns is the bearish outlook provided by on-chain metrics. One of the key indicators, the OI-Weighted Funding Rate, is showing a negative trend. This metric, which tracks the funding rates of futures contracts weighted by their open interest, currently stands at -0.0084%. A negative funding rate typically indicates that short positions are outnumbering long positions, reflecting a bearish sentiment in the market.

In simple terms, more traders are betting against Ripple’s price, expecting it to decline further. This negative sentiment is also reflected in Ripple’s long-to-short ratio, which currently sits at 52.43%. A ratio below one suggests that there are more short positions than long ones, further indicating that traders are preparing for a possible drop in XRP’s price.

Potential for Further Declines

Given the current market conditions and the bearish on-chain data, Ripple’s price may continue to face downward pressure. If the price continues to retrace, it could decline by another 8% from its current level, potentially revisiting the support level at $0.544. This support level could act as a critical point where the price may stabilize if the decline persists.

Technical indicators are also showing signs of weakness. The Relative Strength Index (RSI) and the Awesome Oscillator (AO) on the daily chart are both hovering just above their neutral levels of 50 and zero, respectively. For a sustained bearish trend, these indicators would need to dip below their neutral points, signaling stronger downward momentum.

Is a Reversal Possible?

While the outlook appears bearish, there is still a possibility for Ripple to reverse course. If the price manages to close above the $0.626 resistance level, it could invalidate the current bearish trend. A close above this level would create a higher high on the daily chart, indicating a potential shift in market structure.

If this happens, Ripple could see a renewed bullish momentum, with the price possibly rising by 5.3% to revisit the previous high of $0.658, last seen on July 31. This scenario would represent a significant turnaround for XRP, offering a glimmer of hope for traders and investors looking for a recovery.

Conclusion: Caution Ahead for Ripple

Ripple’s current price action and on-chain metrics suggest that the cryptocurrency may be heading for a period of decline. The failure to break through the $0.626 resistance level, combined with negative indicators like the OI-Weighted Funding Rate and long-to-short ratio, points to potential downward pressure on XRP in the near future.

However, the situation is not set in stone, and a close above the key resistance level could change the narrative, leading to a possible recovery. Until then, caution remains the best approach for those involved in the Ripple market, as the next few days could be crucial in determining the cryptocurrency’s short-term direction.