XRP falls despite ETF inflows: why are buyers still failing to defend $1.40?

XRP has fallen around 2.2% over the past 24 hours to $1.35 as rising US interest-rate expectations and weak short-term momentum have kept the token below $1.40.

US producer prices rose 0.4% in August, adding to inflation concerns as energy prices remained elevated. 

Interest-rate markets were pricing roughly a 70% to 71% probability of a 25-basis-point Federal Reserve rate hike next week, while the US 10-year Treasury yield moved close to 5%.

XRP traded as low as roughly $1.33 during the latest decline before recovering towards $1.35. 

CoinGecko data at the time of writing showed the token down 6.5% over seven days, extending its pullback after an August rally carried the price from around $1 to roughly $1.70.

The selling has spread across the crypto market as higher Treasury yields weigh on risk assets. Bitcoin traded near $77,100 during Asian hours on Friday, while Ether was lower alongside XRP.

Brent crude remained above $100 as tensions in the Middle East kept energy supply concerns elevated. 

Higher oil prices have added to inflation expectations at a time when traders are reassessing the path of US interest rates.

US consumer price data due later on Friday remains the next macro event for crypto markets. 

A higher inflation reading could strengthen expectations for a September Fed rate hike, while a softer figure could reduce some of the pressure coming from Treasury yields.

Selling pressure in XRP has coincided with derivatives deleveraging.

Earlier this week, XRP open interest fell roughly 14%, from around $558 million to $478 million, while the estimated leverage ratio dropped from 0.203 to 0.182. 

Around $14.2 million in XRP positions were liquidated across two sessions.

Long positions took another hit during Thursday's inflation-driven decline, with roughly $13.66 million in XRP longs liquidated as the price moved towards the $1.33-$1.35 region.

Spot ETF flows have moved in the opposite direction. US spot XRP ETFs had accumulated roughly $1.68 billion in net inflows earlier this week, although weekly inflows slowed to around $19 million from roughly $110 million in the previous week. 

Another $12.29 million entered the products immediately before Thursday's decline.

XRP price analysis

XRP's daily chart still has the price above its three major simple moving averages despite the decline to $1.35. 

The 50-day SMA sits near $1.212, the 100-day SMA at $1.164 and the 200-day SMA around $1.274.

XRP/USDT 1-day price chart. Source: TradingView.

The 200-day SMA is the closest of the three and provides a key downside reference if the current support fails. 

XRP first needs to hold the $1.33 area, where buyers stepped in during the latest sell-off. 

A break below $1.33 could expose $1.32 and then the psychological $1.30 level, with the 200-day SMA near $1.274 becoming the next probable target.

Aroon readings on the daily chart have moved closer together, with Aroon Up around 42.9% and Aroon Down near 35.7%. 

Aroon Up retains a small lead, but neither reading is close to the upper end of the range, leaving the daily trend without a strong directional reading.

The 4-hour chart is more bearish. The Directional Movement Index has -DI near 23.5, above +DI at roughly 15.0, showing sellers currently have more directional control. See below.

XRP/USDT 4-hour price chart. Source: TradingView.

The accompanying ADX reading near 19.5 remains below 20, however, meaning the bearish move has yet to develop into a strong trend.

Rate of Change on the same timeframe stands at -3.18%.

XRP's price has been making lower short-term highs since its early September recovery towards $1.45, while the negative ROC reading confirms that momentum over its measurement period remains below zero.

The 24-hour liquidation heatmap places a sizeable concentration of leveraged positions around $1.32-$1.33. 

XRP 24-hour liquidation heatmap. Source: TradingView.

A move through that zone could take XRP towards $1.30, followed by the daily 200-day SMA around $1.274.

Liquidity is heavier above the market, particularly around $1.38-$1.39, with another concentration close to $1.40-$1.41. 

A recovery could therefore draw price towards $1.38 first, but XRP would need to reclaim $1.40-$1.41 to break above the area that has capped recent rebounds. 

The next resistance would sit around $1.45, followed by the early September region near $1.48-$1.50.