Is $0.4 XRP Price Imminent? Insights from Derivative Data

XRP price experienced a prolonged correction on Monday, dipping to a low of $0.43 during a widespread market sell-off. This intensified selling pressure was prompted by a 12% drop in Japan’s index after the Bank of Japan decided to raise interest rates to combat inflation. Although the bearish momentum eased during the U.S. trading hours, the XRP faces a 20% downside risk amid an EMA death crossover and a bear cycle within a triangle pattern.

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Forced Liquidations and Bearish Funding Rate Exacerbate Sell-Off

XRP price has been on a six-day downward spiral, plummeting from $0.627 to $0.49—a 21.5% decrease. During this period, long position holders faced nearly $30 million in forced liquidations, according to Coinglass data. These liquidations have increased sell orders in the market, intensifying the supply pressure.

Moreover, derivative market data for XRP shows an Open Interest (OI)-Weighted Funding Rate of -0.0064. This negative rate suggests that short sellers incur costs to hold their positions, reinforcing a solid bearish outlook and the anticipation of further price drops.

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EMA Death Cross Imminent on Daily Chart

Amid the ongoing correction, the XRP daily chart shows the 50-day Exponential Moving Average is poised to break below the 200-day EMA. This death crossover signals a major signal that could accelerate the current bearish momentum.

Though the flattish 100-and-200-day EMAs signal a sideways trend, the coin price trading below them projects the sellers to have the upper hand.

Triangle Pattern Brings Major Support For XRP Price

The weekly chart reveals that XRP has undergone another bearish reversal within the symmetrical triangle pattern. This chart setup consists of two converging trendlines leading a sideways trend since September 2021. In theory, the ongoing consolidation should serve as a foundation for the prevailing market trend to gather momentum for a significant move.

If history repeats, the coin price is poised for another 20% drop to retest the triangle support at $0.4. A fall below this support may lead to a major downfall for this asset.

On the contrary, the lower trendline has remained a strong accumulation zone for crypto buyers since December 2020. If the support holds, the altcoin could rise over 50% to a challenged overhead trendline around $0.61.