XRP Under Siege: Bears Take Charge as Shorts Flood the Market

Derivatives Data Reveals a Bleak Outlook

XRP is feeling the heat as bearish traders pile on, dominating the derivatives scene. The latest scoop from Coinglass shows the long/short ratio for Ripple (XRP) sitting at a dismal 0.9205. That's right, more folks are betting on a nosedive than a rally. For nearly two weeks, this ratio's been stuck below 1, screaming that bearish vibes are running the show.

Despite a 1.92% dip in open interest, derivatives volume skyrocketed by 35%, hitting a whopping $3.28 billion. What does this mean? Traders are still in the game, but they're mostly playing the short side, bracing for a drop.

Technical Indicators Flashing Red

XRP is currently hovering at $2.14, barely clinging above the critical support level of $2.05. If it crashes through that, buckle up for some serious short-term plunges. The relative strength index is chilling at a neutral 47, but it's on a downward slide. Since it's not oversold yet, there's still plenty of room for a further tumble.

The moving average convergence divergence just flipped negative, hinting that the downward momentum might be picking up steam. With the average directional index at a measly 11, the trend strength is basically non-existent, leaving us with nothing but choppy, sideways action. To top it off, most short- and medium-term moving averages are waving red flags, signaling sell.

Keep an eye on the Bollinger Bands; they're squeezing tight, hinting at a big move on the horizon. But here's the kicker: this squeeze is happening as XRP tests support, which might mean a decline is more likely than a bounce.

Fundamentals Hold Strong Amid Market Chaos

While the short-term setup looks grim, XRP's fundamentals are still rock-solid. Ripple just dodged a major regulatory bullet by settling its beef with the Securities and Exchange Commission. Plus, there's growing buzz around a possible spot XRP exchange-traded fund, with Bloomberg analysts giving it an 85% shot at approval by the end of 2025.

An ETF green light could send institutional demand through the roof and send prices soaring. And let's not forget Ripple's bold $4-5 billion move to buy stablecoin issuer Circle, even if it didn't pan out, it shows they're not messing around when it comes to growth.

Macroeconomic Headwinds and Potential Outcomes

But it's not all sunshine and rainbows. Macroeconomic storms are brewing, with President Trump's tariff policies and sticky inflation messing with risk sentiment. The Federal Reserve's interest rate decision on May 7 and the CPI data drop on May 13 are also on everyone's radar, as they could shake up the crypto market, including XRP.

If XRP can't hold the line at $2.05, it might spiral down to the $1.98-$2.00 range, where the 200-day support is waiting. But don't count the bulls out just yet. If XRP can bounce back from this zone and break above $2.20, it might just flip the script and turn the momentum around. But right now, the odds aren't looking too hot for that comeback.