• XRP extends losses below the 50-day EMA amid a potential return to risk-off sentiment in the broader crypto market.
• XRP exchange reserves have grown to 2.7 billion tokens, indicating increased selling pressure.
• Steady demand for spot XRP ETFs fails to strengthen the short-term recovery outlook.

Ripple (XRP) is edging lower toward the pivotal $2.00 level at the time of writing on Friday, marking three consecutive days of declines. The sell-off extends across the crypto market, with Bitcoin (BTC) falling toward $95,000 and Ethereum (ETH) pressing down on support at $3,300.

XRP under pressure as exchange reserves surge

The number of XRP coins held across exchanges has increased to 2.7 billion as of Thursday, from 2.67 billion on Monday. Looking back, XRP exchange reserves stood at 2.64 billion on December 29, suggesting holders are transferring the tokens with the intention of selling when the price rises.

According to CryptoQuant, rising exchange reserves indicate higher selling pressure, which could pose an increased risk to price recovery.

Meanwhile, demand for XRP derivatives has remained weak, falling to $3.98 billion on Friday from $4.08 billion the previous day. The OI peaked at a yearly high of $4.55 billion on January 8, a move that happened a couple of days after XRP rose to $2.42. Further decline in the OI could drive the prices lower.

Despite the three-day price correction, institutional sentiment remains relatively positive, as reflected in steady inflows into XRP spot Exchange Traded Funds (ETFs).

US-listed XRP ETFs recorded approximately almost $17 million in inflows on Thursday, up from almost $11 million on Wednesday, according to SoSoValue data. The cumulative inflow stands at $1.27 billion, and the net assets at $1.51 billion, indicating steady investor confidence.

Technical outlook: XRP decline persists as $2.00 support holds

XRP is trading at $2.06 at the time of writing on Friday, as headwinds weigh on the cross-border money remittance token. The 50-day Exponential Moving Average (EMA) at $2.08 caps the immediate upside, preserving the bearish bias.

The Moving Average Convergence Divergence (MACD) has crossed below the signal line on the daily chart, while the histogram bars have turned negative, suggesting downward pressure is building. Bearish influence is poised to increase if the Relative Strength Index (RSI) at 50 on the same chart extends its decline below the midline.

However, closing above the 50-day EMA at $2.08 would ease immediate pressure and open room toward the 100-day EMA at $2.20 and the 200-day EMA at $2.32. Failure to reclaim these barriers keeps the path of least resistance downward.

Octalas AI

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