The Key Takeaways
Can XRP ETF optimistic XRP guarantee a continued rally?
XRP ETF’s optimism might provide temporary relief but the weak network growth, coupled with negative address divergence, limits a bullish trend.
Open Interest metrics and On-chain metrics: What are they telling us about XRP recently?
The falling Open Interest, and the subdued activity on chain indicate that traders are cautious and there is not enough speculative backing for a sustained rally.
Ripple’s[XRP] Spot ETF is evolving.
Franklin Templeton extended their filing until November. Meanwhile, the REX – Osprey ETF (launched on 18th September) recorded a trading volume of $37.7 millions on its debut day. This made it one of largest ETF debuts this year.
However, the Spot Taker CVD (9-day) shows that there is still a strong seller’s dominance, indicating profit-taking as well as heavy selling pressure.
The sellers quickly took control of the market, despite intermittent strength from buyers during summer. This shifted momentum in favor of bulls.
This short-term imbalance is a warning sign for XRP. ETFs are optimistic, but the market struggles to break through persistent pressure and generate buyer inflows.
The network and transaction growth is insufficient to fuel demand
XRP’s growth on the network has fallen to only 4,849 whereas transaction numbers hover at 617K. These metrics show a low level of adoption, and a weaker engagement by users.
Historically subdued activity on the network has limited XRP’s ability to support price rallies even when broader confidence increases.
ETF approval can provide a temporary respite, but for structural growth to occur there must be a consistent expansion of the network and increased transactional activity.
The bullish momentum will be slowed down if new players do not start contributing.
Source: Santiment
Are you noticing a decrease in your address?
The divergence between Daily Active Addresses and the price movement further shows XRP’s fragile momentum. Participation is lagging behind prices, signaling a weaker organic expansion.
The negative DAA Divergence persists, suggesting that traders do not want to stay engaged as network adoption continues to be weak.
Rallies in such an environment are often unsustainable, as prices rise without keeping pace with the growth of active users.
As activity continues to stagnate, XRP may lose alignment between valuation and demand. This makes ETFs’ optimism look speculative instead of backed up by the fundamentals. The address divergence is continuing to raise doubts about the bullish momentum.
Source: Santiment
The open interest of traders drops as they reduce their exposure.
The Open Interest in XRP Derivatives fell by 3.34%, to $7.33 Billion. This is due to a reduction of speculative positions across the futures market.
The decline in the market suggests that traders are showing more caution than confidence, and are therefore rethinking their aggressive betting.
Although reduced exposure may lower volatility over the short-term it can also signal a diminished appetite for risks, and diminished support for rallies.
History has shown that significant uptrends for XRP often coincide with a rise in OI. The importance of the derivative market is highlighted by this correlation. As ETFs become more popular, current trends are pointing to a weakening of the speculative market.
Source: CoinGlass
Can ETF optimism overcome on-chain weaknesses?
Despite increasing speculation surrounding XRP’s ETF approval the overwhelming dominance of buyers, the subdued activity on networks, negative divergence in addresses, and falling Open Interest all highlight significant headwinds.
To sustain a rally for XRP, the investor demand needs to be aligned with a stronger on-chain development rather than relying on only regulatory changes.
ETF approval could spark temporary relief in prices. However, without new activity in the network and derivatives market, any upward momentum may quickly fade.
Evidence suggests that XRP requires a greater structural involvement before it can be optimistically viewed as delivering lasting benefits.
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Source: ambcrypto.com
