Feb. 6, 2024: Ripple’s native cryptocurrency, XRP, is currently treading water above the $0.50 mark. However, the latest data from derivative markets suggests that traders are bracing for potential declines, with bearish indicators on the rise.

Market Sentiment Turns Sour

The past week has seen XRP’s value dip by 6%, exacerbated by a recent hacking incident involving Ripple Labs co-founder Chris Larsen. Despite recovery efforts, market reactions have skewed negative, pushing the price down from $0.54 to the pivotal $0.50 level.

Derivatives Indicate Growing Pessimism

Open interest in XRP futures has climbed by $66 million, despite the price downtrend. This divergence typically indicates a bearish consensus, with short sellers likely increasing their bets against XRP’s price stability.

Long vs. Short: The Tug of War

For nearly a month, the long-to-short ratio has remained below 0.99, hinting at the bear’s grip on the market. Currently, at 0.97, this metric shows that shorts slightly outnumber longs, reinforcing the downbeat sentiment.

Technical Indicators Support Bearish Outlook

The Parabolic SAR, a technical analysis tool, is also signaling a bearish momentum with its values hovering above XRP’s price. This alignment often encourages traders to consider selling or opening more short positions.

What’s Next for XRP?

If bearish trends continue, XRP could slide below the $0.50 support, with a potential target of $0.45. However, should the bulls rally, a push back up to $0.55 could invalidate the current negative forecast, though resistance at $0.54 looms large.