XRP extended its upward move on Tuesday, adding more than 6% in the previous session, as derivatives data showed traders increasingly positioned for further gains. However, on-chain metrics are flashing caution, suggesting the rally could be entering a more fragile phase.
Derivatives traders turn bullish
Data from CoinGlass shows that long positions now outnumber shorts for XRP. The long-to-short ratio stood at 1.15 on Tuesday, a reading above 1 indicating that more traders are betting on price increases than declines. Funding rates also turned positive on Monday, reaching 0.0079% on Tuesday, reflecting stronger demand for bullish exposure. Positive funding means long holders are paying shorts, a typical sign of bullish sentiment, though excessively positive funding can eventually increase the risk of a long squeeze.
Overheating signals emerge
Despite the improving derivatives metrics, CryptoQuant's market indicators highlight several risks. XRP's spot and futures markets are showing signs of overheating, while futures activity reflects sell-side dominance. Elevated participation from retail traders adds another layer of risk, as heavily crowded retail positioning can make the token more vulnerable to sudden volatility. These signals suggest that while the rally retains bullish momentum, it may be entering a more fragile phase.
Institutional interest rises
In addition to growing retail demand, institutional interest in XRP products has been on the rise. Data from CoinGlass' ETF page reveals that spot XRP exchange-traded funds (ETFs) recorded an inflow of $11.26 million on Monday, their largest inflow since Wednesday. If inflows persist, XRP could extend its rally in the near term, with bulls targeting the $1.90 resistance level.
Technical outlook
XRP is trading at $1.40 on Tuesday, holding firmly above its 50-day, 100-day, and 200-day exponential moving averages, which are clustered between approximately $1.25 and $1.36. Holding above these indicators supports XRP's constructive medium-term structure and maintains a bullish near-term bias. The Relative Strength Index is slightly below 60, signaling positive momentum without indicating overbought conditions. However, the Moving Average Convergence Divergence remains marginally negative, suggesting that bullish momentum is stable rather than accelerating.
On the downside, XRP's first important support sits near the 200-day EMA at $1.35. A break below that level could expose horizontal support at $1.30, followed by the 50-day EMA near $1.28 and the 100-day EMA around $1.25. If selling pressure intensifies, the $1 psychological level represents a stronger structural support zone.
On the upside, XRP faces major resistance near $1.90. A decisive daily close above that barrier would strengthen the bullish outlook and potentially clear the way for another upward move. Until then, positive derivatives positioning supports further gains, but overheating signals and futures selling pressure warrant caution.
This article is for informational purposes only and does not constitute financial advice.
