The crypto market exhibited heavy trading momentum throughout the weekend. Bitcoin produced one of its most impressive corrections ever, and XRP was still looking bullish. Yet, new information reveals that Open Interest (OI) for derivatives is on a decline even as some XRP wallets continue to increase. This mixed landscape creates a confusing and burdensome environment for traders and investors trying to navigate the digital asset space.
Bitcoin’s price jumped past $85,500 on Tuesday. That impressive jump followed up an almost 7% rebound the week before and injected good vibes and optimism into the market. XRP managed to keep that bullish momentum all weekend long, thanks in part to a 90-day tariff suspension in the United States. Despite these all being great indicators, the derivatives market saw a -2.75% decrease in OI. After today’s 24-hour drop, it currently sits at $3.29 billion.
XRP Holders Accumulate as Open Interest Dips
While the broader market shows signs of bullishness, a closer look at XRP reveals interesting accumulation patterns among large wallet holders. Wallets holding between 1 million and 10 million XRP now make up 9.27% of the total supply. Addresses between 10 million and 100 million XRP control 11.61% of the supply between them. This indicates a large-scale strategic buildup by major players in the XRP market, which may be shaping its price dynamics.
This build up happens alongside a falling Open Interest in the derivatives market. The 2.75% drop in OI to $3.29 billion indicates reduced participation or hedging activity, which can introduce volatility and uncertainty. Volume has tanked 40% to $9.99 billion over this period. If true, this change would suggest that far too many of the current jobs are being eliminated permanently. This growing divergence between accumulation and OI poses curiosity on how sustainable this current XRP bullish trend is.
Within the past day, there were liquidations totaling an unbelievable $13.86 million. Long positions were hit the hardest, responsible for $8.2 million, with short positions making up $5.66 million. This bias in liquidations highlights the reality and risks of leveraged trading. Beware of sharp price reversals, especially when Open Interest is falling.
Technical Indicators Support Bullish Sentiment
While these big-picture worries remain from the derivatives market data, technical indicators for XRP make for a more bullish overall outlook. The RSI, Relative Strength Index, remained neutral at 49.95 but climbing, suggesting the establishment of increasing buying pressure. The MACD buy signal and an uptrending RSI massaged the bullish momentum on Monday, indicating potential for more gains to come.
These technical signals could be playing a hand in the continued bullish outlook seen throughout the weekend. Combined with positive technical indicators, this strategic accumulation by large wallet holders can form a buffer. This buffer lends some relief against the adverse impact of a shrinking Open Interest. Nonetheless, traders would be wise to stay wary and keep a close eye on these indicators, because conditions can change quickly on a dime.
The neutral RSI, along with a MACD buy signal, provides a mixed but generally bullish view. These indicators, in combination with the accumulation patterns, provide a more well-rounded picture of what XRP’s trajectory may continue to look like. Investors need to balance all of these factors, focusing on the bullish signals while paying attention to the bearish implications regarding the health of market participants.
Tariff Suspension and Market Impact
The 90-day tariff suspension in the U.S. has certainly helped to create this bullish sentiment across the broader cryptocurrency market. President Trump further announced that exemptions aren’t forever, and goods will still face the current 20% fentanyl tariffs. This additional guidance introduces even more doubt into the process. Market participants now need to prepare for the inevitable return of tariffs and be able to measure their effect.
The unprecedented tariff relief kicked down a door for domestic and export market participants. This opportunity led to a sense of excitement and renewed optimism, providing momentum for new investments. The fact that these are not permanent measures means we should take a more careful approach. Traders and investors now have to consider the impact of future tariffs and the likely repercussions on market trends.
