XRP, the cryptocurrency associated with Ripple, is facing mounting bearish pressure that could result in a significant price plunge. Technical indicators and derivatives market data point to the possibility of a 41% correction, potentially driving XRP down to $1.18. Currently trading at $1.99, XRP has already dropped 12.6% in the last five days, hitting a low of $1.91 on June 22.

Market analysts are closely watching a descending triangle formation on XRP’s daily chart, which may signal a continuation of the downward trend. Let’s explore the key indicators suggesting that XRP’s price could decline further in the near term.

Bearish Sentiment in Derivatives Market

A major concern for XRP bulls is the falling open interest (OI) in the derivatives market. According to data from CoinGlass, XRP’s OI has declined by 36% in just over a month, from $5.53 billion on May 14 to $3.54 billion on June 23. This suggests that investors are exiting their positions, possibly in anticipation of a further drop in XRP’s price.

XRP/USD daily chart.

Historically, a drop in open interest is often correlated with declining momentum, as fewer funds and traders are involved in the market. A previous instance of a sharp OI decline occurred between January 20 and February 8, when XRP’s open interest fell 74% and the token lost 32% of its value, dropping from $3.40 to $2.26.

Additionally, funding rates have turned negative, shifting from 0.0057% on June 22 to -0.0068% on June 23. This flip in funding rate reflects a growing number of traders betting against XRP’s price, reinforcing bearish sentiment in the short term.

Descending Triangle Targets $1.18

XRP’s daily chart reveals the formation of a descending triangle pattern—a bearish technical setup that often signals a reversal after a prolonged uptrend. The pattern is marked by a flat support level near $2.00 and a series of lower highs forming a downward-sloping resistance line.

Traders typically interpret a breakdown below the triangle’s support level as a strong bearish signal, with the expected price drop equal to the maximum height of the triangle. For XRP, this pattern implies a downside target of approximately $1.18—a 41% decline from the current price.

The ongoing struggle of bulls to keep XRP above $2.00 is raising concerns, especially as previous analysis had already identified the $2.00 mark as a critical support. Failure to hold this level could trigger a steeper correction in the coming days.

Hope for Bulls Above $2.22

While the current outlook appears bearish, there is still a chance for a bullish reversal. A breakout above the triangle’s resistance level at $2.22—which coincides with the 50-day and 100-day simple moving averages—would invalidate the descending triangle setup. Such a move could reignite buying interest and propel XRP toward the $3.00 mark, resuming the broader bullish trend.

XRP/USDT three-month liquidation heatmap (Binance). Source: CoinGlass

However, the bulls face stiff resistance around this level, and only a decisive close above $2.22 on strong volume would confirm a bullish breakout.

Liquidation Heatmap Points to $1.75–$1.60 Support Zone

XRP’s next major liquidity zones offer potential areas of support—or risk of further downside, depending on how the market reacts. The Binance XRP/USDT liquidation heatmap shows significant clusters of leveraged positions between $1.75 and $1.60.

If the $1.75 level fails to hold, a cascade of liquidations could ensue as long positions are forced to close, pushing prices even lower toward the $1.60 mark. This cluster is expected to act as a short-term magnet for price action, making it a critical level to monitor in the coming days.

Conclusion

With declining open interest, negative funding rates, and a bearish chart pattern, XRP faces strong headwinds. The descending triangle suggests a possible 41% correction to $1.18 if $2.00 support breaks. While a breakout above $2.22 could revive bullish sentiment, the prevailing indicators lean heavily towards a bearish outlook. Investors should keep a close eye on the $1.75–$1.60 zone, as it could be the next battleground for XRP’s direction.