XRP Whales Sell 900K Tokens - Is This the Start of a Larger Downturn?

In just five days, XRP whale investors have sold off 900,000 XRP tokens, reigniting negative sentiment in the market. This increase in selling activity aligns with falling Open Interest and weakening technical indicators, sparking concerns among traders. With XRP currently situated near a significant support level, questions arise about whether this sell-off marks the onset of a prolonged downturn or if it's simply a brief market correction.

Key Takeaways

XRP whales have offloaded 900,000 XRP in five days, causing increased bearish sentiments.
This selling trend coincides with a drop in Open Interest and troubling technical indicators, indicating caution among traders.
XRP’s price remains within a vital support zone, leading to discussions about the potential for a larger sell-off or a temporary correction.

XRP whales unload 900K tokens - Is this the start of a deeper sell-off?

Analyzing Demand Zones as Bearish Sentiment Grows

As of the latest updates, XRP's price is situated within an important demand zone, ranging from $2.20 to $2.30. Historically, this zone has offered a strong base for price accumulation and recoveries. However, the recent pattern of lower highs suggests that bearish sentiment is gaining traction.

Additionally, price movements indicate repeated failures to break above a descending resistance trendline, hindering meaningful breakout efforts. The Relative Strength Index (RSI) reading of 35.22 points to decreasing momentum and hints at approaching oversold conditions that might attract buyers.

Moreover, the Directional Movement Index (DMI) shows a -DI at 36.38, significantly higher than the +DI at 13.13, reinforcing bearish control and indicating strong momentum in the downward trend.

XRP Price Chart
Source: TradingView

Declining Leverage as Open Interest Decreases by 15.73%

The derivatives market has experienced a notable decline in activity, with Open Interest dropping by 15.73% to $3.52 billion. This decrease likely reflects a cautious market sentiment as traders unwind their leveraged positions during increased volatility.

Such a sharp decrease in Open Interest often signifies risk aversion, especially in response to major liquidations or sudden price fluctuations. While this moderation in leverage might stabilize short-term volatility, it also underscores a lack of strong market conviction as participants avoid making aggressive directional bets.

The diminishing activity in derivatives correlates with the broader trend of reduced whale accumulation, indicating a potential slow-down in XRP's speculative momentum. Nevertheless, it's essential to note that reduced leverage could create conditions for more natural and less volatile price movements in the upcoming sessions.

Open Interest Chart
Source: Coinglass

Key Volatility Levels at $2.3 and $2.2

According to Coinglass’s heatmap data, critical liquidation zones are identified around the $2.30 and $2.20 levels, highlighting important areas for market participants. The density of these liquidation clusters indicates where leveraged positions are particularly vulnerable, and they often act as catalysts for sudden market volatility.

If XRP falls below the $2.20 level, it could trigger cascading liquidations, amplifying downward momentum as traders are forced out of their positions. In contrast, a robust defense of these levels might lead to short squeezes, as traders look to close out bearish positions, potentially driving prices higher.

This dynamic tug-of-war suggests that XRP’s next significant movement will likely arise from actions within this liquidity area, making the $2.20–$2.30 zone crucial for market direction in the near future.

Liquidation Heatmap
Source: CoinGlass

Can Bullish Support Hold at the $2.2 Zone to Shift Momentum?

As of now, the combination of whale selling, bearish signals, declining Open Interest, and increasing liquidation pressure presents a cautious short-term view for XRP.

Bulls now face a critical challenge at the $2.20 zone. Successfully defending this area could ignite renewed accumulation and lead to short-term relief. Conversely, if sellers manage to maintain pressure below this point, XRP may continue its decline, potentially leading to a deeper correction before any meaningful recovery occurs.