Is XRP price going to drop again?

Key points:

• XRP derivatives markets turn bearish amid reducing institutional demand, suggesting further downside for XRP price.

• XRP’s descending triangle breakout could lead to a decline toward $1.96.

XRP (XRP) has rebounded by more than 45% since April 7 lows to trade at $2.31 on May 27. But the price remains 31% below its January 2025 peak of $3.40, raising concerns about XRP’s ability to rise higher.

Will XRP’s price drop from the current levels in the coming days?

XRP derivatives data lean bearish  

One of the clearest signs that there could be trouble ahead for XRP is the presence of neutral funding rates and decreasing open interest (OI) in its futures markets.

Funding rates are periodic payments made between long and short traders in perpetual futures contracts to keep prices aligned with the spot market.

When neutral, it indicates a balance between long and short positions, reflecting a lack of strong directional bias among traders. 

XRP funding rates have hovered around 0% since February, indicating that traders are ambivalent. This could lead to continued price consolidation or sideways movement as the market lacks a clear catalyst for a breakout.

Meanwhile, XRP’s OI in the futures market has dropped to $3.2 billion, down 9.6% from its three-month peak of $3.52 billion on May 13. 

Historically, assets with declining open interest struggle to maintain upward momentum, as there’s insufficient capital and enthusiasm to drive prices higher. 

For XRP, this could mean that even minor selling pressure might trigger a cascade of liquidations, especially if leveraged positions are unwound. 

Without renewed interest from institutional or retail traders, XRP’s price risks sliding back into a downward spiral.

Investors de-risk from XRP investment products

Institutional demand for XRP investment products appears to be waning, according to data from CoinShares.

XRP exchange-traded products (ETPs) posted the largest weekly outflow of $37.2 million, breaking an impressive 80-week inflow streak. This brought month-to-date outflows to $28.6 million.

While CoinShares did not highlight any reasons why XRP-related products experienced the largest outflows, other top-cap cryptocurrencies such as Bitcoin (BTC), Ether (ETH) and Solana (SOL) recorded significant net inflows of $2.9 billion, $326 million and $4.3 million, respectively.

This indicates a decreased institutional appetite for XRP investment products, a negative catalyst for the XRP price.

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XRP descending triangle hints at 16% price drop

The XRP price chart has been forming a descending triangle pattern on its four-hour chart since May 14, characterized by a flat support level and a downward-sloping resistance line.

A descending triangle is a chart pattern that forms after a sharp uptrend is seen as a bearish reversal indicator. As a rule, the pattern resolves when the price breaks below the flat support level and falls by as much as the triangle’s maximum height.

The bulls are struggling to keep XRP above the 200-day simple moving average (SMA), currently at $2.18, signaling a lack of strength.

If this trend continues, a close below the 200-day SMA at $2.31 could sink the XRP/USDT pair toward the triangle’s support line at $2.28.

If this support fails, XRP price could tumble toward the downside target at around $1.96 by the end of May, down 16% from current price levels.

XRP’s descending triangle target echoes an earlier analysis that warned of a possible decline to as low as $1.61 if key support levels didn’t hold.

Conversely, a clear breakout above the triangle’s resistance line at $2.35 (the 50-day SMA) would invalidate the bearish structure, putting XRP in a good position to rally toward the $3.00 psychological level.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.