Sell-offs have been ravaging the XRP digital asset for a while as the crypto market has recovered. This comes as no surprise given that the XRP price has been ranging low since January, and the first upsurge has presented an opportunity for early sellers to exit the market. This, interestingly, plays into the bullish narrative of the altcoin as the sell-offs push it further into oversold territory, creating the possibility of a bounce-off point from here.
XRP Netflows Remain Negative
A data researcher who goes by Dom on X shared an update on the XRP outflows, showing that they have remained negative for a while. In the post, Dom explains that XRP has been in oversold territory for the 7-day period, despite the rise in the altcoin’s price. The screenshot attached showed that over 88 million XRP tokens were sold off, which amounted to $210.9 million.
Data from the Coinglass website corroborates this as XRP net flows have remained negative for the last seven days at the time of this writing. So far, May 9 has been the worst in terms of sell-offs with net flows dropping to -$96.33 million in one day. The subsequent days have seen an average of -$20 million in net flows.
However, this was no cause for alarm. If anything, Dom explained that this could be bullish for the XRP price. One reason for this is that prices are going up while sell-offs are dominating, which shows that retail is not behind it. He explains that whales and market makers are likely absorbing the coins being dumped on the market, thus leading to the simultaneous increase in price.
Dom explains that this is a “bullish imbalance from an order flow microstructure lens,” meaning that it could actually end up being good for the XRP price. A continuation of this trend is expected to push the price higher, especially as sellers run out of tokens to sell.
Open Interest Shows Investors Are In
While the net flows continue to be negative, the XRP open interest tells a different story, according to Coinglass. It has been climbing in the month of May, following the price increase during this time. At the start of the month, the open interest was sitting $3.72 billion, but has since grown to peak at $5.53 billion on May 14.
This rise in the open interest shows that investors are actively placing bets on the XRP price. As the interest continues to rise, the price could jump in response to the new liquidity flowing in. This could set the price on a quick path to $3.
Featured image from Dall.E, chart from TradingView.com
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