Long positions in XRP have grown rapidly over the last few weeks, with well over $1.5 billion worth of exposure being added to the derivatives market since the start of August.
This buildup of leverage exposure is indicative of increased bullish positioning among traders who expect the coin to stage a recovery.
According to Crypto Rover, XRP is building up โparabolicโ exposure, and this has been attributed to the recent growth in long positions. It is evident from the above chart that exposure has been steadily increasing to reach around $1.596 billion.
Notably, while futures exposure growth might indicate similar demand for XRP in the spot markets, it is possible for traders to build up such exposure without buying any XRP at all.
XRP Testing $1 Support as Price Structure Narrows
XRP is currently trading at $1.0056, and the psychological $1.00 level has been the focus of the present market structure. For the past few months starting from February, the daily chart has created lower highs under a descending trendline, thus signifying that sellers have been controlling the market more.
Another trendline has been created since June on the $1.00 support level, thereby forming a narrowing structure in the form of a descending wedge. Now, XRP is nearing an important level as the price narrows under both support and descending resistance levels.
The crucial resistance level is seen in the range of $1.10โ$1.15. Any daily close above this region will make the existing bearish market structure weaker and move the market toward the next technical level of $1.20. In case of a breakdown below $1.00, the current setup will be invalidated.
Weak RSI Keeps Momentum Under Pressure
Momentum indicators are keeping their guard up. The daily RSI comes in at 35.64, while the moving average holds at 39.90. Both figures continue trading below the neutral 50 line, suggesting that bearish momentum is still prevailing within the overall pattern.
On the other hand, the RSI approaches the oversold area. Although this is a signal that selling has gone too far, it does not mean that a reversal will happen immediately. Traders may want to see some RSI recovery before calling the momentum change a definite one.
Trading volume also remains relevant. Previously, lower levels had been seen alongside increased trading, while consolidation is now seen amid low volume. This means buyers have not shown enough interest in the asset yet.
Crowded Longs Lead to a Double-Edged Structure
The emergence of more bullish XRP longs, along with $1 support and a squeezed price range, creates a high-risk structure. If spot demand improves and XRP breaks above $1.10โ$1.15, the bullish positioning could help to continue the uptrend toward $1.20.
Nevertheless, if XRP fails to hold $1.00, the situation could turn out differently. In such an event, crowded longs could get liquidated, adding to downside momentum.
XRP is now at a crossroads in terms of the technical picture. A breakout from descending resistance lines would indicate a rally, while a daily close below $1.00 could confirm the bearish structure.
