XRP (Ripple) holds at $1.30, but why has retail investor demand cooled?

▲ XRP/ChatGPT generated image ©

XRP (Ripple) is attempting a rebound around $1.30, but the enthusiasm in the derivatives market, which gauges retail investor demand, is cooling. Amid declining open interest and weakened momentum, the support level of $1.28-$1.26 is holding, but $1.36, where the 200-day Exponential Moving Average (EMA) is located, has emerged as the first hurdle for recovery.

According to FXStreet, an investment media outlet, on September 17 (local time), XRP was trading around $1.30 on Thursday, defending the short-term moving average support zone. After rising to $1.50 on Monday, it has faced downward pressure due to the failure of the U.S. crypto market structure bill, the Clarity Act, to advance in the Senate, and the Fed's 0.25 percentage point interest rate hike. The Fed raised its benchmark interest rate to 3.75-4.00%. However, Ripple emphasized that the legal basis for XRP not being a security has been established through its long-standing legal dispute with the U.S. Securities and Exchange Commission (SEC).

In the derivatives market, demand slowdown is evident. XRP perpetual futures open interest decreased from 2.25 billion XRP the previous day to 2.12 billion XRP on Thursday. This contrasts with the increase to 2.78 billion XRP on August 15. The media analyzed that if the cooling trend in open interest continues, XRP's recovery could become even more challenging amidst macroeconomic uncertainty and a lack of upward catalysts in the cryptocurrency market.

While the Fed's interest rate hike has largely been priced into the market, there's also an analysis suggesting that expectations for a rapid recovery to $1.50 should be lowered. Markus Levin, co-founder of XYO, explained that the Fed's upward revision of economic growth projections indicates that policymakers do not view the U.S. economy as being in a severe recession, and if inflation starts to decline, there could be room to halt rate hikes without significant further increases. Conversely, the impact of high borrowing costs and reduced liquidity on risk assets may appear with a time lag.

Technically, XRP is above the support zone formed by the 50-day EMA at $1.28 and the 100-day EMA at $1.26, but the 200-day EMA at $1.36 is limiting its upward movement. The MACD (Moving Average Convergence Divergence) is below the signal line and below the 0-line, and the negative histogram has slightly expanded, indicating weakened upward momentum. The RSI (Relative Strength Index) is at 47, close to the neutral line, supporting the possibility of sideways movement rather than a clear direction.

In the short term, $1.36 has been identified as a key resistance level. If XRP approaches this price during a rebound, selling pressure is likely to intensify again. On the downside, $1.28 and $1.26 will act as support levels consecutively. The media predicted that if XRP falls below both moving averages on a daily closing basis, the short-term trend would clearly turn bearish, and the correction could expand.

So far, optimistic signals are emerging in the market, with Zcash hitting an all-time high and Bitcoin enduring the Clarity Act's failure and the first interest rate hike in three years. However, the media noted that the Bitcoin rebound seen immediately after tightening in 2022 lost momentum around the end of the month, suggesting that whether this current rebound can continue until the end of this month will be a key test to gauge its similarity to 2022.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*