Summary
⚈ XRP’s RSI is 38, and recent Ripple token unlocks add selling pressure.
⚈ No clear bearish catalyst exists, but bullish sentiment grows amid Ripple-SEC case progress.
The ratio of newly-opened XRP shorts compared to long positions reached a 2-week low on May 5, as the token’s price failed to breach resistance at $2.20.
To be more precise, 55.07% of positions opened in the past 12 hours have been longs, and 44.93% have been XRP shorts, per data retrieved by Finbold from market intelligence platform CoinGlass.
At press time, the price of XRP had fallen to $2.15, marking a 1.67% decline on the daily chart. Prices briefly touched the $2.14 mark on two occasions, but quickly bounced off, demonstrating a strong degree of demand at those levels.
Is the reduction in XRP shorts a bullish signal or a false alarm?
XRP’s relative strength index (RSI) currently sits at 38, indicating that the cryptocurrency has not yet entered oversold conditions.
In addition, Ripple’s recent unlock of 1 billion tokens has led to an increase in selling pressure. With that being said, 700 million of those tokens were promptly re-locked, so the development is unlikely to drive prices below crucial support levels, at least on its own.
Conversely, an increase in speculative bullish positions isn’t something that will likely cause a rebound in price — but it does speak to widespread bullish sentiment.
Moreover, there appears to be no clear bearish catalyst at play — at present, the drop in price appears to be solely the result of market-wide dynamics and exhaustion on the part of the bulls.
On the other hand, positive developments regarding the Ripple v. SEC case, which is expected to conclude soon, could cause enough of a sentiment shift to keep XRP out of the danger zone in the near term.
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