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- Santiment shows that a large number of short positions have been seized against XRP and ADA, with analysts predicting a bear market for both veteran cryptocurrencies.
- However, some point out that if the price of XRP rises, all short positions will be liquidated, propelling the token’s price even higher.
XRP has lost 8.3% over the past month, hitting its lowest level in a year just above $0.46. This has led to bearish sentiments among traders, with data showing that traders have increasingly taken short positions against the token, but some analysts believe this could fuel a comeback for the world’s seventh most valuable crypto.
At press time, XRP changed hands at $0.4854, trading in a narrow range over the past week, where it hit a weekly high of $0.5183 on Monday before plunging a few hours later. Trading volume suffered from the weekend’s cyclical downturn to reach $391 million, half the previous day’s volume.
Year-to-date, XRP has lost over 20% of its value, the worst performance among the top ten cryptocurrencies by market capitalization. By comparison, Bitcoin and Ethereum have gained just over 50% over this period, while BNB has almost doubled despite Binance’s legal troubles a few months ago. The only other major currencies to do worse were Cardano’s ADA and Avalanche’s AVAX.
This performance was reflected in the derivatives market, where traders accumulated short positions against ADA and XRP, according to Santiment. The crypto-currency market intelligence platform stated:
Cardano and XRP are some of the more notable altcoins seeing big traders selling short after relief bounces. This is a good sign for patient bulls, as liquidated shorts can effectively serve as “rocket fuel” for further price rises.
As the chart below shows, traders have bet big that both chips will continue to fall. However, if one of the two tokens gets rid of the bears and makes even moderate gains, most of the shorts will be wiped out, which could provide them with the “fuel” they need to launch a bullish rally.
Despite bearish sentiment in the derivatives market, long-term holders remain confident in XRP’s future. As one analyst points out, the token has formed a triangular trading pattern similar to that which preceded the incredible bull rally of 2017. Prior to 2017, the triangular pattern had been narrowing for three years, and when the token finally crossed the upper trendline, it reached a new record high.
As the chart below shows, XRP has been stuck in a similar wedge ever since, and it’s heading for a high point in the near future. As Crypto News Flash previously reported, the pattern aligns with the period in which most legal experts expect the SEC ruling to be issued. A positive decision for Ripple could provide the fuel needed to break above the upper trendline, pushing XRP to new highs.
