After a slight upward movement at the beginning of the year, the price of XRP (XRP) has remained predominantly under pressure, reflecting the negative trend of overall market conditions.
While the crypto market continues to face headwinds, a key signal from the derivatives market suggests a potential bullish recovery once investor interest returns.
The price of XRP is struggling, but the derivatives setup could favor a recovery
BeInCrypto Markets data shows that XRP started 2026 with momentum, recording an increase of over 27% in the first five days of January. However, the momentum quickly faded, and the altcoin reversed course, giving back much of the initial gains.
In the last 24 hours, XRP has extended its bearish trend, marking a contained loss of 0.078%. At the time of publication, it was trading at $1.88. Although the price movement remains sluggish, developments in the derivatives market are attracting greater attention.
In a recent post, analyst Darkfost highlighted a marked decline in the open interest of XRP after it reached a peak of 1.76 billion dollars on Binance on July 17.
The analyst added that this drop coincided with a sharp correction in the price of XRP. The altcoin fell from $3.55 to about $1.83, losing almost half of its value.
“With the liquidation of positions or their voluntary closure, the open interest on Binance has continued to decrease, recently falling below the threshold of 500 million dollars. This level has been maintained since the exceptional liquidation event on October 10,” reads the post.
The contraction of open interest highlights a significant reduction in liquidity in the derivatives market, especially after the market crash in October. The analyst also noted that the drop in price mechanically compresses the values of open interest, intensifying the overall decline.
Despite the intensity of the retracement, Darkfost emphasized that these deleveraging phases play a crucial role. They help to remove excess leverage and bring the market structure back to healthier levels.
“These periods are highlighted when the open interest of XRP on Binance falls below its six-month average. Historically, these 'cleanup' phases are often followed by a bullish recovery, when investor interest gradually returns to the derivatives market,” explained the analyst.
In addition to the derivatives market, BeInCrypto has also identified signs of potential recovery. The analysis shows that the Liveliness parameter has decreased, indicating an increasing accumulation by long-term holders. This change generally reduces selling pressure.
The Relative Strength Index (RSI) has also recently risen from oversold levels below 30, a typical signal of trend exhaustion. Additionally, XRP is trading within a 'descending wedge' pattern, a configuration that often anticipates bullish breakouts if confirmed.
The combination of signals from the derivatives market, long-term accumulation, and oversold technical indicators creates a potentially positive picture for a recovery. However, opposing factors persist that could challenge the bullish scenario.
Data shows that XRP reserves on Binance and Upbit increased in January, representing almost 10% of the circulating supply. This concentration, especially after the price drop, may indicate increasing selling pressure, as coins are moved to exchanges with the likely aim of being liquidated.
In summary, the coming weeks will determine whether the deleveraging phase has removed enough excesses to support a true recovery or if, on the contrary, further declines are likely.
