The Funding Rate has recently been very close to 0 and occasionally slightly negative, indicating that the long side is not overly crowded in futures contracts. From this perspective, the current structure does not suggest a classic over leveraged long accumulation, so establishing a strong bearish expectation based solely on funding data would be inaccurate. However, the Estimated Leverage Ratio has recently risen from around 0.14 to 0.17. In other words, market leverage is increasing while the XRP price remains weak, which could lead to sharper price movements. Particularly if the price breaks below support, high leverage could trigger long liquidations and accelerate the decline.

XRP is still moving downward within a weak trend. Despite short lived recoveries after June, the price has weakened again. Consequently, the combination of rising leverage and the inability to establish a strong uptrend creates a risky setup favoring the bears. While the price remains weak, the ATR has started rising again in recent weeks, pointing to a resurgence in volatility. Since the price is in a downtrend, I interpret this as increasing selling pressure. Therefore, if XRP loses the critical $1 support level, the downward momentum is highly likely to gather speed. If long liquidations kick in, the sell off could be significantly sharper than a typical price move.

Written by PelinayPA