XRP Crashes into $1 Liquidity Pocket Amid Rising Open Interest and Leverage

XRP has reached a crucial liquidity pocket around $1, where bears have been focusing their attention for months. According to CryptoInsightUK, this area is the largest liquidity cluster on the chart, and XRP's behavior after reaching it has made the next move difficult to predict.

CryptoInsightUK has been tracking this liquidity zone since July, when he opened a large short position between $1.08 and $1.10. Despite XRP nearly reaching $1.18, the analyst continued to expect a drop into the liquidity pocket.

However, trading volume remains low across major exchanges, including Binance and Coinbase, despite XRP dropping close to $1. This lack of conviction from both short sellers and buyers makes the outcome uncertain.

The rise in open interest has become CryptoInsightUK's main concern. Leveraged exposure measured in XRP has risen by 29%, adding about 188 million XRP to open contracts, while dollar-denominated open interest has increased by roughly $166 million. This surge in open interest is reminiscent of previous major declines on XRP, which have occurred alongside price drops of 30% to 43% in open contract value.

CryptoInsightUK sees two main outcomes after XRP completes the liquidity sweep: a sharp move lower similar to the October 10 event or a relief rally. The analyst currently favors the downside scenario due to the lack of spot buying and the positive funding rates, which suggest many new leveraged positions favor longs.

The weekly RSI for XRP gives bulls some reason for optimism, as it has moved close to historical cycle lows. However, this pattern is not a guarantee, and CryptoInsightUK remains cautious due to the uncertain market conditions.