XRP is currently facing a major shift in market sentiment, with Futures Open Interest (OI) experiencing a significant decline. After peaking at $7.62 billion on January 18, 2025, XRP’s OI has dropped to just $3.02 billion, nearing its lowest level of the year. This sharp reduction in futures open interest suggests that traders may be losing confidence in XRP’s short-term prospects, leading to a reduction in altcoin bets.

A Decline in Futures Open Interest

The dramatic drop in XRP’s Futures OI highlights a broader trend in the cryptocurrency market. A market-wide bearish sentiment, characterized by volatility and frequent price fluctuations, has prompted many traders to liquidate open positions. XRP, like many altcoins, has been affected by these market dynamics, which often lead to fear of missing out (FOMO) and a subsequent abandonment of trades.

As one of the major cryptocurrencies, XRP has seen fluctuating interest levels. The drop in open interest may reflect the growing apprehension among traders, as they reassess their positions in response to broader market conditions. In fact, the Futures OI for XRP has been halved since its peak in January, signaling a shift in trader behavior.

Market Sentiment Remains Bearish

Despite a series of positive developments surrounding XRP, such as pro-crypto U.S. President Donald Trump’s inauguration and multiple filings for spot XRP Exchange-Traded Funds (ETFs), short-term market sentiment remains largely bearish. This continued downward trend has led to fewer intraday traders engaging with XRP. As a result, the current sentiment does not seem to align with the optimism created by recent news and institutional interest.

On-chain metrics further highlight the mixed nature of market sentiment. While short-term traders have pulled back, long-term holders and institutional investors have taken advantage of XRP’s lower price levels. According to Coinglass, large investors have been making significant accumulations amid the price decline, signaling confidence in XRP’s potential for the future.

However, this accumulation has not yet translated into significant upward price movement. The overall market sentiment remains cautious, with traders and investors more focused on protecting against further declines than positioning for a rebound.

XRP Price at Risk: Bearish Momentum

XRP’s price has recently fallen below a critical support level of $2.25, which has further fueled the bearish outlook. At the time of writing, XRP was trading at $2.23, down 0.85% in the past 24 hours. Additionally, XRP’s trading volume has declined by 35% over the same period, indicating lower participation from traders compared to the previous day. This drop in volume is a common indicator of decreasing interest and market hesitation.

Given the recent price action, analysts are suggesting that XRP could experience further declines if the bearish trend continues. If XRP fails to recover from its current price levels, it may face a 13.5% drop, with the next support level around $1.90. This level is also aligned with the 200-day Exponential Moving Average (EMA), adding another layer of technical significance to the potential drop.

A Possible Turnaround?

Despite the negative sentiment in the short term, some analysts are optimistic that XRP could see a rebound in the long run. The significant outflow of $187 million worth of XRP tokens from exchanges in the past week suggests potential accumulation. If this trend continues, it could generate buying pressure, setting the stage for a future price surge. However, for now, the prevailing market sentiment remains cautious, and the focus is on whether XRP can hold its support levels.

Conclusion

XRP is at a critical crossroads, with its price and futures open interest reflecting the current bearish sentiment in the cryptocurrency market. The decline in futures open interest, combined with the breakdown of key support levels, suggests that traders are retreating from XRP bets in the short term. However, long-term holders seem to be using this price dip to accumulate more tokens, and if buying pressure increases, a potential reversal could follow. For now, the immediate risk remains to the downside, and XRP’s price could face further declines if it fails to hold key support levels.