XRP issues a key buy signal! Open interest contracts bottomed out, target price $3.10

XRP open interest drops to the lowest since April, typically indicating a reversal. Trader CW8900 notices a breakout from a descending triangle on the 4-hour chart, rebounding from $1.90. Key resistance is at the 200-day EMA; a breakout targets are $2.35 and $3.10 respectively. If support at $1.90 fails, the price could fall to $1.40.

Historical Insights from Open Interest Reaching April Lows

The open interest (OI) in XRP futures has fallen to its lowest level since April 2025, a technical indicator historically signaling a trend reversal. Open interest represents the total value of all unsettled futures contracts; a decline suggests many positions are being closed or expired, indicating reduced market participation.

Looking back to April 2025, XRP traded sideways between $1.80 and $2.50 for a period, similar to recent months. OI was also low then, reflecting subdued market sentiment with most traders on the sidelines. However, this lull didn’t last long. Within two months, prices started rising, eventually surging to $3.55, the highest since January 2018.

This pattern of history repeating has caught traders’ attention. A decline in open interest can be interpreted in two ways: first, waning market interest and investors exiting; second, leveraged positions being liquidated, clearing out over-leveraged trades, and preparing for the next rally. From April’s experience, XRP’s low open interest served as a springboard for a rebound.

Currently, conditions resemble April’s. XRP trades sideways between $1.90 and $2.50, with open interest hitting lows again. Market sentiment is cautious but not despairing. Such consolidation often precedes a significant move; once a breakout occurs, accumulated momentum could be unleashed rapidly. If history repeats, XRP could challenge the $3 level again within the coming weeks.

Notably, declining open interest also indicates reduced market leverage, lowering the risk of cascading liquidations. Excessive leverage often causes sharp, waterfall-like crashes during volatile moves. The current low-leverage environment favors stable upward movement. For risk-tolerant investors, this accumulation phase might be an ideal entry point.

Breakout of Descending Triangle and Technical Signals

(Source: Trading View)

Trader CW8900 is a popular crypto analyst with over 18,000 followers on X. He identified an early buy signal in a descending channel on the 4-hour chart, suggesting XRP is poised to rally. A descending triangle is a common consolidation pattern in technical analysis, typically formed by a horizontal support line and a downward-sloping resistance line.

In recent days, XRP rebounded from around $1.90, breaking out of the descending triangle pattern. Such a breakout is significant, often indicating a trend reversal. The last time XRP experienced a similar breakout, the price surged to $2.35 within just 5 days, about a 23% increase. This historical reference adds credibility to the current breakout.

Confirmation of the breakout requires volume. If volume increases on the breakout, it signals genuine buying interest and validates the move. Conversely, a lack of volume could mean a false breakout, with the price returning inside the triangle. Traders should monitor volume closely over the next few days to assess sustainability.

CW8900 also notes that momentum indicators on the 4-hour chart are turning bullish. The Relative Strength Index (RSI) is recovering from oversold levels, and the MACD histogram is converging, both signaling strengthening buying momentum. Coupled with low open interest and the triangle breakout, multiple technical signals are aligning for a potential rally, often producing stronger upward moves.

200-Day EMA as a Critical Threshold with Dual Target Path

(Source: Trading View)

A key resistance to watch is the 200-day exponential moving average (EMA). This is one of the most widely used long-term trend indicators; when the price is above the 200-day EMA, it’s generally considered a bullish sign, below it indicates a bearish trend. Currently, XRP trades below the 200-day EMA, suggesting a long-term bearish bias.

If XRP breaks above this line, the price could surge to $2.35, then potentially reach $3.10. These targets are based on Fibonacci extensions and previous highs. The $2.35 level is the upper boundary of a previous consolidation zone and a tested resistance. Breaking through would open the path toward $3.10, near early 2025 highs.

Price Path After Breaking 200-Day EMA

First target: $2.35, the previous consolidation upper boundary, requiring volume confirmation.

Second target: $3.10, the early 2025 high, close to the Fibonacci 1.618 extension.

However, if support at $1.90 fails, the price could fall to $1.40 before rebounding. The $1.90 level is the horizontal support of the descending triangle and a recent key support zone. A breakdown below this would invalidate the bullish structure, triggering stop-losses and panic selling, pushing prices lower.

$1.40 is not arbitrary; it’s a deeper technical support, near previous lows and a long-term cost basis zone for holders. A move down to this level might attract bottom-fishing capital, setting the stage for a stronger rebound. Nonetheless, such a deep correction would prolong consolidation and delay a breakout above $3.

From a risk-reward perspective, current levels are attractive for long entries. Setting a stop at $1.90, targeting $2.35, yields a risk-reward ratio of about 1:2. Extending the target to $3.10 increases the ratio to approximately 1:4. This asymmetric reward profile explains why many traders are willing to establish long positions now.

Market Sentiment and Altcoin Season Correlation

XRP’s movement is influenced not only by technical factors but also by overall market sentiment. Currently, the crypto market is in a delicate phase: Bitcoin hovers near $100,000, Ethereum and other major coins are consolidating. Such broad sideways action often precedes an altcoin season.

Historical data shows that altcoins tend to rally after Bitcoin completes a significant move and enters consolidation. The current market structure resembles previous altcoin seasons: Bitcoin’s gains slow, capital searches for undervalued, high-potential assets. As a top-10 coin, XRP often benefits early from capital inflows into altcoins.

With signs of a potential altcoin revival, attention is shifting from Bitcoin to other assets. XRP’s legal clarity (with the SEC case resolved), spot ETF approvals, and successful RLUSD stablecoin launch provide a foundation for institutional interest. If an altcoin season materializes, XRP could be among the biggest beneficiaries.

However, investors should remain cautious. Macroeconomic uncertainties, regulatory changes, and emerging competitors could impact XRP’s trajectory. Maintaining prudence, setting proper stop-losses, and avoiding excessive leverage are essential principles for participating in XRP trading under current conditions.