XRP Price Forecast: Bear Flag Warns of $1.16 Retest Even as Binance Reserves Hit 2022 Lows

Ripple (XRP) is down 0.52% to trade at $1.24 at the time of writing. The drop comes despite a decline in XRP reserves on Binance to the lowest since December 2022.

Meanwhile, XRP’s four-hour chart shows the formation of a bear flag that could trigger a decline below $1.20. Reduced demand for XRP ETFs is also damping the sentiment around the altcoin.

Futures data shows that there is increased demand for short positions on XRP as traders bet on a future price decline.

XRP Binance Reserves Hit Four-Year Lows

Data from CryptoQuant XRP reserves on the Binance exchange dropped from 2.69 billion XRP on October 28 to 2.47 billion XRP on October 30. This suggests that the reserves fell by 220 million within two days.

Per analyst Amr Taha, the decline in reserves was not limited to the Binance exchange. On Bybit, XRP reserves dropped from 306 million XRP to 286 million XRP, while on Bithumb, the same metric dropped from 1.847 billion XRP to 1.837 billion XRP.

A decline in exchange reserves is usually bullish for the value of XRP because it reduces the amount of tokens that are available on exchanges for traders to sell.

Demand for ETFs Fades Despite Bullish News

Data from SoSoValows shows that XRP ETFs had only one day of inflows in the week between October 26 and October 30. The ETFs also recorded outflows of $496,000 on October 30.

ETF outflows are bearish for price because they suggest that institutions are choosing to minimize risk on the altcoin.

The outflows are also rising despite bullish news around Ripple, including the recent investment-grade rating of RLUSD by Moodys. RLUSD has emerged as the first stablecoin to receive this rating.

Ripple also recently expanded its partnership with BNY Mellon to support tokenized assets, another move that supports a bullish long-term outlook for XRP price.

XRP Short Positions Increase Despite Falling Open Interest

Data from CoinGlass shows that the XRP long/short ratio has dropped to 0.88. This ratio has been below 1 since October 27, suggesting that the number of short accounts is outpacing the number of long accounts.

At the same time, the open interest on XRP has dropped from 2.30 billion XRP on October 30 to $2.25 billion XRP at the time of writing. This shows that the OI has shed 50 million XRP in under 24 hours.

When the open interest drops while the number of short accounts is increasing, it suggests that long traders are closing their accounts or there was an increase in long liquidations.

Following the recent hack on the Binance exchange, XRP recorded $41 million in long liquidations as the price dropped to multi-week lows.

XRP Price Forecast as Bears Warn of Drop to $1.16

The four-hour chart for XRP price shows the formation of a bear flag pattern. XRP was also dropping to test support at the lower trendline of this pattern.

A breakdown of this support could push Ripple price below $1.20 to the 123.6% Fib of $1.16. The altcoin will invalidate this bullish pattern if it moves above the resistance at $1.28.

The four-hour’s RSI also sits at 37 to suggest that the momentum is also leaning bearish.

At the same time, the one-day chart shows that XRP price has dropped below crucial support at $1.28. XRP price needs a close above the 50-day EMA to confirm a reversal of the short-term trend to bullish.

A move towards the 200-day EMA of $1.36 could also signal that the long-term trend has shifted bullish.

However, the MACD line on this longer timeframe remains on the negative side to show that the momentum is still favoring bears.