XRP has been navigating a challenging downtrend recently, but several data points suggest a potential bullish reversal is on the horizon. Despite a nearly 20% slip in the past 45 days, causing it to consolidate within a descending triangle pattern near the $2.70 support level, there are indications that an 85% bounce to new highs could be in the cards.
One key factor supporting this optimistic outlook is the reset in leverage within the XRP futures market. Open interest has decreased from $11 billion to $7.5 billion, reflecting reduced speculative activity. The token's estimated leverage ratio on Binance has returned to its yearly average, signaling that traders are no longer excessively leveraged. This reduces the risk of widespread liquidations, which can exacerbate price drops, and promotes greater price stability during market corrections.
On-chain indicators further reinforce the potential for a reversal. Net taker volume is approaching a neutral stance, supported by an increase in aggregated spot cumulative volume delta (CVD), which tracks the dominance of buyers versus sellers. This shift suggests that holders may be entering an accumulation phase, acquiring more XRP at these lower prices. Futures positioning also aligns with this view, as aggregated futures CVD has been steadily declining, and funding rates have normalized to quarterly levels, indicating that crowded positions have been cleared.
The technical outlook reveals a confluence of key price levels that could trigger a significant rebound. A fair value gap exists between $2.35 and $2.65, closely aligned with Fibonacci retracement levels and a Q1 fractal pattern previously observed before a sharp price breakout. Analysts are closely monitoring this zone, as stabilization within this range would increase the probability of a 60% to 85% rebound in the fourth quarter. Recent price action has drawn comparisons to XRP's 2021 breakout pattern, with analysts noting similarities in the wedge structure, suggesting a breakout above $3 could lead to a move towards $4–$5 in the coming months.
However, it's important to acknowledge the risks and bearish signals. XRP's chart structure shows a clear lower low after testing $2.7, suggesting the downtrend remains in play. The formation of a descending triangle pattern, with $2.7 acting as base support, is viewed by technical traders as a bearish continuation pattern, indicating potential for further pressure if buyers fail to defend current levels. The Moving Average Convergence Divergence (MACD) indicator on the weekly timeframe continues to post lower highs, reflecting falling momentum. The moving averages are edging toward a second bearish cross, which often signals extended downside pressure.
Furthermore, on-chain activity on the XRP Ledger has slowed significantly, with a 54% decline in active addresses, indicating declining user engagement and transaction activity. Large volume holders have also been reducing their holdings, potentially taking profits as XRP sustains a weak technical structure.
Despite these concerns, the potential for new catalysts could outweigh the bearish pressures. The imminent launch of spot XRP exchange-traded funds (ETFs) is generating significant buzz. Similar to the spot Bitcoin ETFs, these XRP ETFs could provide a convenient way for both retail and institutional investors to gain exposure to XRP, potentially driving billions of dollars of new capital into the token.
Overall, while XRP is currently stuck in a downtrend, several data points offer a glimmer of hope for a substantial rebound. The reset in leverage, accumulation signals, and key technical levels, combined with potential catalysts like spot XRP ETFs, suggest that an 85% bounce to new highs is within the realm of possibility. However, investors should remain vigilant of the risks and bearish signals, closely monitoring price action and on-chain activity to make informed decisions.
