Ripple (XRP) Declined by 1% on Tuesday, as On-Chain and Futures Data Reveal the Impact of the Recent Market Downturn on Its Investors

Ripple's XRP declined by 1% on Tuesday, as on-chain and futures data reveal the impact of the recent market downturn on its investors.

Ripple’s XRP declined by 1% over the past 24 hours as on-chain and futures data revealed the impact of the recent market downturn on its investors.

The remittance-based token is battling to hold the upper boundary of a descending channel on the daily chart. A move lower could send XRP towards the $1.35 support level.

XRP sustained $7.40 million in futures liquidations over the past 24 hours, according to Coinglass. Of the total amount liquidated, $5.15 million were longs and $2.25 million were shorts.

Also, XRP funding rates have mostly been negative in recent weeks, which indicates that most traders are opening short positions following the wider crypto market’s consolidation.

Funding rates are periodic payments between traders holding long and short positions to keep the price of perpetual futures contracts in sync with the underlying asset they follow.

Despite XRP’s derivatives market indicating heightened bearish sentiment, its price decline has been minimal compared to most top crypto assets. While Bitcoin (BTC), Ethereum (ETH) and Solana (SOL) are in the red on the weekly timeframe, XRP managed to pull a 3% gain.

A potential reason for the low price decline is that XRP investors – especially long-term holders (LTH) – are still up on their investments by an average of 233%, according to Santiment.

The Dormant Circulation metric, which measures the movement of previously idle tokens, shows that most of XRP’s recent distribution comes from coins that are 1 year old and lesser.

Meanwhile, the conclusion of SEC vs Ripple's legal battle could be the catalyst to switch XRP towards a bullish momentum following reports of both parties nearing an agreement.

The legal battle has been ongoing since 2020 after the SEC alleged that Ripple sold unregistered securities in the form of XRP to raise $1.3 billion over a seven-year period.

XRP is currently trading at $2.01. If the price manages to break above the upper boundary of the descending channel, it could continue rising to reach its next resistance at $2.72.

If the price breaks above the $2.72 resistance level, it could rise further to test its seven-year high.

The Relative Strength Index (RSI), Stochastic Oscillator (Stoch) and Moving Average Convergence Divergence (MACD) are all testing their neutral levels. A firm crossover above their neutral levels will indicate a switch toward dominant bullish momentum and potentially boost XRP's price.

However, a daily candlestick close below the support near the $2.00 psychological level will invalidate the thesis and send XRP towards $1.35.