XRP risks further dip as Open Interests decline: check forecast

The cryptocurrency market ended August bearish, with Bitcoin dropping to the $107k level a few hours ago. While it has slightly bounced back, the market sentiment remains bearish and could record further sell-off in the coming hours and days.

XRP fails to defend the $2.79 support level

XRP, the native coin of the Ripple ecosystem, has been underperforming over the past few days. The coin is down 3% in the last 24 hours and dropped to the $2.71 level a few hours ago.

The decline means that XRP has failed to defend the $2.79 support level and could face further bearish movement over the next few hours or days.

The bearish performance comes as Bitcoin, Ether, and other leading cryptocurrencies underperform.

While XRP has slightly recovered and now trades at $2.80 per coin, the market sentiment remains bearish, and the coin could face further selling pressure. 

XRP’s dip can be attributed to several factors, including a risk-off sentiment in the broader cryptocurrency market. The risk-off sentiment in crypto assets comes as traders look forward to the Federal Reserve's (Fed) September interest rate decision.

Declining on-chain activity is also affecting XRP’s price. According to CryptoQuant, the number of active addresses has declined over the last few weeks, from approximately 50,000 in mid-July to around 24,000.

Furthermore, Coinglass revealed a pullback in the XRP futures Open Interest (OI) from $10.94 billion to $7.97 billion over the same period.

The decline in XRP’s OI means that there is a lack of conviction in the coin’s ability to recover or sustain an uptrend. Thus, increasing the possibility of the downtrend continuing in the short term. 

XRP’s bearish shape could see coin retest $2.5

The XRP/USD 4-hour chart has switched bearish as XRP has been underperforming over the last few days. The coin has lost 5% of its value over the last seven days and could record further losses in the coming hours or days.

Currently, XRP is trading below the $3.00 psychological level and the 50-day Exponential Moving Average (EMA), signaling a shift in sentiment from bullish in July to bearish as the September candle opens.

The MACD lines are within the negative territory, while the RSI of 44 shows that XRP is heading into the oversold region if the bearish trend continues.

The reversal in these momentum indicators shows that traders are de-risking to protect their capital.

By breaking below the $2.79 support level, XRP could extend its decline and retest the 200-day EMA at $2.49. However, traders are still optimistic about a recovery, with the FOMC coming up later this month.

A reversal above $3.00 could boost interest in XRP and allow the coin to rally towards a new all-time high of $4 or higher in the coming weeks.