XRP not rising despite a flood of good news, is the shrinking derivatives market holding it back?

▲ XRP/AI-generated image ©

Despite bullish sentiment heating up social media, XRP (Ripple) is struggling to break through the $1.40 resistance level, hampered by a shrinking derivatives market and declining demand from retail investors. With added macroeconomic uncertainty, technical weakness persists, making a short-term directional search inevitable.

According to investment media FXStreet on April 30 (local time), XRP is fluctuating around $1.37 in the aftermath of the hawkish interest rate freeze by the U.S. Federal Reserve (Fed). The Fed maintained its benchmark interest rate at 3.50-3.75%, closely watching the uncertainty of peace talks between the U.S. and Iran. Chairman Jerome Powell maintained a cautious stance, stating that monetary easing would only be considered after a thorough evaluation of the impact of soaring energy prices on inflation.

Retail investor engagement has noticeably dwindled. According to CoinGlass data, perpetual futures open interest on Thursday decreased from $2.52 billion the previous day to $2.45 billion. Although the $2 billion mark is being defended, it is a dismal figure compared to the all-time high of $10.94 billion recorded last July. This suggests a significant drop in retail investors' confidence in the sustainability of XRP's uptrend. In contrast, the XRP spot Exchange Traded Fund (ETF) recorded a net inflow of $3.59 million on Wednesday, attracting funds for two consecutive days and surpassing $1.3 billion in cumulative inflows, showing a contrasting trend.

Despite sluggish market indicators, Santiment data shows that social media bullish sentiment for XRP surged to its second-highest level in two years. The source of this excitement is its successful integration into Rakuten's ecosystem, Japan's giant retail network. Users can now directly convert loyalty points into XRP via Rakuten Wallet and use them for payments within the ecosystem. Researchers analyzed that this positive news would not lead to an immediate price surge but rather generate positive long-term, structural demand after the initial euphoria driven by FOMO (Fear Of Missing Out) subsides.

Technical analysis still indicates a bearish bias. XRP price is currently trapped below the 50-day Exponential Moving Average (EMA) at $1.41, the 100-day EMA at $1.52, and the 200-day EMA at $1.76, showing a strong bearish inclination. A heavy downtrend line persists above, and the Relative Strength Index (RSI) on the daily chart hovers around 45. The Moving Average Convergence Divergence (MACD) histogram shows a slight negative value, indicating residual downward momentum but has not yet entered the oversold territory.

The first hurdle for a rebound is the 50-day Exponential Moving Average (EMA) at $1.41. A strong breakout above this level is necessary to extend gains towards the downtrend line at $1.51 and the 100-day EMA at $1.52, after which the 200-day EMA at $1.76 is expected to act as a significant medium-term resistance. Conversely, if the weekly low support level of $1.35 breaks, selling pressure could accelerate, posing a risk of further decline to $1.30.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*