XRP Seeing Hidden Coiled Spring as Heavy Shorting Meets Growing Accumulation

XRP trades within a hidden coiled spring, with the market witnessing an influx of short positions amid growing spot accumulation.

XRP has dropped nearly 14% this month due to the recent broader selloff led by Bitcoin. At the time of writing, XRP trades around $1.14. 

Despite the ongoing weakness, recent market data suggests that some investors may be quietly building positions while many traders continue to bet on lower prices.

XRP Faces Selling Pressure as Bearish Bets Increase

In a recent market report, verified CryptoQuant analyst CryptoOnChain called attention to signs that XRP could be preparing for a massive move despite its recent decline.

According to the analyst, XRP fell to around $1.09, its lowest level in six months. The slowdown has also affected network activity, with total transaction counts dropping 25% compared to the previous month. While these figures show weaker activity across the network, derivatives data reveals a growing interest.

CryptoOnChain noted that Open Interest has grown to 494 million. Also, the Estimated Leverage Ratio has continued to rise, showing that traders are taking on larger leveraged positions. This increase suggests that speculation remains strong as the asset struggles to recover.

Importantly, much of this leverage is coming from traders expecting further losses. Binance Funding Rates have moved into negative territory, averaging -0.006 after falling more than 550% week-over-week. This shows that a large number of traders are opening short positions as XRP trades near local lows.

XRP Seeing Growing Spot Accumulation

While futures traders continue to increase bearish positions, activity in the spot market appears to be moving in the opposite direction.

CryptoOnChain observed that large investors have been withdrawing XRP from exchanges. For instance, The Crypto Basic confirmed that Binance recorded nearly 90 million XRP in net outflows on June 10. CryptoOnChain confirmed this, noting that withdrawals far exceeded deposits during that period.

The analyst also pointed out that Binance outflows have jumped more than 83% month-over-month. This means that XRP supply is leaving the exchange at a faster pace while traders on the derivatives side continue to increase their short exposure.

According to CryptoOnChain, when high Open Interest combines with deeply negative funding rates and large exchange withdrawals, the conditions often become favorable for a short squeeze.

The analyst acknowledged that XRP could still face additional downside, but argued that the continued reduction of exchange supply suggests that larger market participants may be accumulating.

Important XRP Levels to Watch

Meanwhile, in a separate analysis, market commentator EGRAG noted that XRP was moving sideways above its short-term moving average. According to him, buyers remain in control on the lower time frame as long as the price stays within the support zone between $1.1340 and $1.1408.

The analyst presented $1.1938 as the first major resistance level. If bullish momentum strengthens, XRP could then move toward the next key target at $1.26. 

However, on the downside, EGRAG highlighted $1.09 as the main support level. He also mentioned $1.05 as a critical support area and invalidation level. 

According to the analyst, a breakout above the current consolidation range could clear the way for a move toward $1.1938. However, if XRP loses its current support zone, the asset could revisit the $1.09 level.