XRP accumulation jumps: will weak derivatives data slow the rally?

According to an FX Street report, XRP has rebounded by 2% in early Asian trading on Thursday as accumulation trends strengthen among investors.

On-chain data suggests that investors are shifting towards a buy-the-dip mentality following the recent market downturn.

While the spot market shows increasing accumulation, the derivatives sector remains cautious, with declining open interest and negative funding rates.

This mixed sentiment presents a crucial moment for XRP, with technical indicators pointing towards a possible rally if it breaks through resistance levels.

However, risks remain, including a potential long squeeze that could drive prices lower.

On-chain data supports upside

After the February 3 market crash, XRP investors have increased their holdings, as indicated by the Mean Coin Age metric.

This metric tracks the average number of days tokens remain in their current wallets, with an uptrend signifying network-wide accumulation.

The 30-day Market Value to Realized Value (MVRV) ratio, which measures investor profitability, has hit -17% in the past week.

Historically, such levels have preceded significant price rallies.

The last time MVRV reached similar lows, XRP surged by over 60%, suggesting a potential bullish reversal if history repeats itself.

Despite these bullish signals in the spot market, derivatives traders remain cautious.

Open interest in XRP derivatives has declined by over 30%, dropping from 2.05 billion XRP to 1.42 billion XRP.

Negative funding rates in recent days further indicate a lack of aggressive bullish positioning.

Key levels to watch

XRP's price action has been constrained within a key range following the February 2–3 market crash, which erased several long positions.

The current support level stands at $2.26, while resistance is set at $2.55.

This rectangular trading pattern highlights market indecision, with investors awaiting a breakout in either direction.

If XRP can push above $2.55 and clear additional resistance at $2.72, it could trigger renewed bullish sentiment, attracting higher trading volumes.

Failure to hold above the $2.26 support could result in a sharp downturn, potentially leading to a long squeeze of over $80 million. In such a scenario, the next key support level would be $1.96.

SEC filing fuels speculation

Adding to market anticipation, the US Securities and Exchange Commission (SEC) acknowledged Grayscale’s XRP ETF filing on Tuesday.

Bloomberg analysts Eric Balchunas and James Seyffart estimate a 65% chance of approval, further fueling speculation around XRP’s long-term potential.

Traders are also closely monitoring liquidity dynamics.

XRP futures liquidations totaled $5.91 million in the past 24 hours, with $2.80 million in long positions and $3.11 million in short positions being wiped out.

This liquidation trend suggests continued volatility in the near term.

From a technical perspective, XRP’s Relative Strength Index (RSI) and Stochastic Oscillator remain above their neutral levels, reinforcing short-term bullish momentum.

However, if XRP closes below $1.96, the current bullish outlook would be invalidated, opening the door for further downside.

Outlook: breakout or squeeze?

XRP’s increasing accumulation phase suggests that investor confidence is gradually returning following the recent market crash.

While technical indicators and on-chain metrics hint at a potential rally, sustained price growth will depend on breaking above resistance levels and renewed interest in derivatives markets.

For now, XRP remains at a critical juncture.

A move above $2.55 could fuel a significant uptrend, but a breakdown below $2.26 could trigger a long squeeze, pushing prices lower.

Traders should closely watch volume trends and derivatives activity for further confirmation of the next major move.