Can XRP Price Break Out of 7-Month Consolidation as Bulls Reduce Leverage Bets?

XRP price is targeting a breakout from a seven-month consolidation range as bulls reduce their leverage bets on the altcoin. At press time, XRP was trading at $2.15 with a slight 0.9% gain in 24 hours and $2.5 billion in daily trading volumes on June 19. The breakout from this range is looming because of a squeeze of the Bollinger band indicators and the narrowing symmetrical triangle pattern that teases at a 41% rally.

XRP Price Eyes Breakout From 7-Month Consolidation

XRP price has been moving sideways in the last seven months between $1.67 and $2.94. However, this choppy movement has not been unique to the Ripple token alone, as most altcoins have failed to mirror Bitcoin’s strength due to capital rotation to the largest crypto.

The technical structure on the daily timeframe shows that a breakout for Ripple’s token could be imminent. Bollinger bands are narrowing, and when this happens, it usually indicates that a strong move, either upwards or downwards, is about to commence.

A bullish breakout above the upper Bollinger band of $2.31 could signal the start of a bullish rally. However, if sellers start selling now as they lose conviction in holding XRP may crash, forcing a bearish breakdown below the lower Bollinger band of $2.08.

A symmetrical triangle pattern also shows that it is likely that the XRP price will make a breakout from consolidation. If the price overcomes resistance at the upper trendline, it could kickstart a 41% rally to $3.22. Conversely, losing this support level may force XRP to fall below $2 to the triangle’s bearish target price of $1.24.

For a bullish breakout to occur, buyers would have to step into the market again, and currently, they are still hesitant because of its reading of 45. Until this happens, XRP price could remain within this consolidation zone.

Besides buyers, bullish news also plays a major role in supporting an XRP breakout from consolidation. Currently, the community is eagerly awaiting a joint motion ruling in the Ripple vs. SEC case that could pull buyers back into the market.

Bulls Reduce Leverage Bets

Data from Coinglass shows that bulls are reducing their leverage bets towards XRP, and this could create room for the price to recover. Bulls usually place long positions on an asset, and whenever these positions are liquidated, it creates sell-side pressure, forcing XRP to fall back to range lows. Therefore, when these traders reduce their positions, it could bode well for the price.

The reduced leverage is depicted by the fall in open interest, which has declined to $3.94 billion from the May high of $5.52 billion. This represents a nearly 30% decline within one month.

At the same time, the long/short ratio has declined to 0.96, a sign that traders have closed long positions and are opting for short positions. This could be bullish for the XRP price in case a short squeeze happens.

Therefore, there is an increased chance that the XRP price could break out of the seven-month consolidation range as Bollinger bands on the daily charts squeeze and a symmetrical triangle appears. The closure of leveraged positions could also pave the way for a bullish or bearish breakout.