Ripple (XRP) is currently trading securely above the pivotal resistance level of $1.40, hovering around $1.47 as of Wednesday. While the incremental increase is definitely positive, it has notably managed to erase the losses that occurred the previous day. However, the potential for further upward momentum appears to be constrained due to low trading activity from both institutional and retail investors. This cautious environment could limit XRP’s bullish ambitions, with the immediate target being Sunday’s high of $1.67.

The Diminishing Demand for XRP: Retail and Institutional Trends

Since hitting its record peak of $3.66 in July, XRP has faced considerable difficulties in maintaining its momentum. The token has been subject to erratic price swings, significantly influenced by a weakening retail derivatives market. This decline in retail interest is pronounced, with the XRP futures Open Interest (OI) recorded at $2.45 billion on Wednesday, a noticeable drop from the previous day’s figure of $2.53 billion. This decline is particularly stark compared to July when the OI peaked at an impressive $10.94 billion, which aligned with the all-time high of the token.

The ongoing decrease in retail engagement closely mirrors the overall downturn in XRP’s price. As the OI diminishes, a significant number of traders are opting to close their positions rather than open new ones. This trend leaves XRP particularly susceptible to market pressures and a prevailing risk-averse sentiment among investors.

Additionally, XRP spot Exchange-Traded Funds (ETFs) have also observed a marked decline in investor interest, illustrated by subdued trading activity on Tuesday. Data from SoSoValue reveals that US-listed XRP spot ETFs remained stagnant, with no trading flows, resulting in cumulative inflows of $1.23 billion and net assets under management totaling $1.06 billion.

As interest in various related investment products declines, there is a corresponding reduction in overall risk appetite among investors. This weakening sentiment not only dampens XRP’s recovery potential but also escalates the likelihood of a prolonged bearish trend in the coming weeks.

Technical Outlook: XRP Holds Above Support Amid Lingering Sideways Trading

XRP has been unable to surpass the previous Sunday high of $1.67, while consistently maintaining support around the $1.40 mark. Despite the Moving Average Convergence Divergence (MACD) indicator indicating a buy signal since Saturday, the prevailing trend remains bearish overall. The 50-day Exponential Moving Average (EMA), sitting at $1.71, the 100-day EMA at $1.92, and the 200-day EMA at $2.13 are trending lower, which effectively limits any significant upward movement. A further decline below the critical demand zone at $1.40 may result in a retest of last Friday’s low at $1.35.

In the meantime, the Money Flow Index (MFI), which tracks the inflow and outflow of money into XRP, is currently rising to 53. This indicates a steady risk appetite among investors. A more significant increase in the MFI would likely signal a bullish shift, paving the way for XRP to possibly break out toward the $1.67 mark.

Upcoming targets for XRP include overcoming the psychological resistance at $1.50 and addressing the next seller concentration at $1.54, which corresponds to the high recorded on February 6. Given the current market dynamics, investors and traders may find it increasingly challenging to navigate the complexities of the crypto space. In such scenarios, utilizing tools like the AI legalese decoder can prove invaluable. This AI-driven platform simplifies legal jargon, helping investors better comprehend essential documents, contracts, and financial agreements. With a clearer understanding of the legal landscape, traders can make more informed decisions regarding their investments in volatile markets such as XRP.