XRP is showing some upward movement, though it's still under $1.90, as traders try to take charge.
The XRP Ledger's active addresses fell to 49,500 on Sunday, indicating less on-chain activity.
The share of XRP in profit has dropped to levels similar to those in early January, a sign of increased investor selling.
Open interest in XRP has been decreasing since its January 6 high, which points to waning confidence among retail investors.
Ripple (XRP) is currently trading close to $1.90, having seen some modest gains.
Bulls are trying to regain their footing after a week of wild price swings that saw XRP tumble to $1.81 on Sunday.
But the recovery is a delicate one, particularly with the specter of a possible partial shutdown of the U.S. government looming later this week.
Three important indicators point to XRP's next move, which could depend on whether the bulls can keep up their momentum or if the bears take over, increasing the chances of a more significant correction.
1. XRP's bounce-back is at risk as on-chain activity slows down.
The number of addresses actively trading on the XRP Ledger (XRPL) fell by 3% to 45,000 on Sunday, down from roughly 51,600 on January 5th. This drop indicates a weakening of on-chain activity.
Low user engagement is a drag on XRP, which makes its price susceptible to both increased supply and a general aversion to risk in the crypto world.
2. XRP percentage held in profit resets
The proportion of XRP's circulating supply currently held in profit dropped to 50.4% on Monday. This is a sharp decline from 77.2% on January 5th and 80.4% on November 10th. Such a drop indicates a worsening sentiment, reflecting a lack of investor confidence. Essentially, investors seem to be eager to cash out at the first opportunity, which adds to the selling pressure.
Conversely, this could also hint at a potential price rebound for XRP. With fewer investors in profit, the supply available for sale is shrinking.
Investors tend to hold onto their positions when they're sitting on losses, rather than selling in a panic.
3.Retail sentiment is also taking a hit, as evidenced by the falling Open Interest.
XRP is struggling in a derivatives market that's reflecting a broader sense of caution in the crypto world. CoinGlass data indicates that Open Interest (OI) averaged $3.26 billion on Monday, a drop from $3.4 billion the day before, and significantly lower than the $4.55 billion seen on January 6th. OI measures the total value of open futures contracts, so a sustained decrease points to a lack of retail investment and a general lack of faith in the cross-border remittance token. If this downward trend continues, XRP could face even more challenges, raising the likelihood of a further decline towards the April low of $1.61.
