XRP Faces Downside Risk Despite ETF Hopes

What to Know

• Options traders are showing bearish sentiment on XRP, favoring puts over calls across multiple timeframes.
• Despite strong order book depth, XRP recently broke down from a bullish chart pattern, pointing to a potential retest of key support levels near $1.60.
• Market speculation suggests XRP could be next in line for a U.S.-listed spot ETF after Bitcoin and Ethereum.
• Technical indicators and derivatives data signal caution, as traders hedge against possible further price declines.

XRP ETF Hype Grows, But Market Participants Remain Cautious

XRP has been in the spotlight lately due to mounting speculation that it could become the next cryptocurrency to receive approval for a spot exchange-traded fund (ETF) in the U.S., following in the footsteps of Bitcoin (BTC) and Ethereum (ETH). However, despite the growing optimism in the broader crypto community, key indicators in the options market paint a different picture.

The latest data from Deribit, a leading crypto options exchange, shows a significant tilt toward put options on XRP. Put options, often purchased to hedge against or profit from a price drop, are currently trading at higher premiums than call options across various timeframes. This discrepancy, known as options skew, highlights a growing concern among traders about XRP’s near-term price trajectory.

Options Skew Reveals Bearish Sentiment

In the world of derivatives, the skew between call and put options offers insight into trader sentiment. A negative skew, where put options cost more than calls, typically indicates bearish outlooks. In XRP’s case, this skew persists across short- and mid-term maturities, suggesting that investors are bracing for further downside.

Traders often use options to protect their portfolios from adverse price moves. The elevated demand for puts implies that many are either hedging existing XRP positions or anticipating potential declines in the coming weeks. This aligns with a broader trend seen in volatile crypto markets, where sentiment can shift rapidly based on macroeconomic cues and regulatory developments.

XRP Price Action Breaks Bullish Pattern

From a technical perspective, XRP’s recent chart behavior supports the caution being shown in the derivatives market. The token fell out of an ascending wedge pattern earlier this week—typically a bearish signal—indicating weakening momentum and the possibility of revisiting recent support levels. At the time of writing, analysts are watching for a potential retest near the $1.60 range, a level that previously acted as a support zone during price corrections.

An ascending wedge breakdown often signals that buying pressure is no longer strong enough to sustain an upward trend. This technical development adds further weight to the bearish narrative suggested by options data.

Order Book Depth Points to Strength, But May Not Be Enough

Despite the recent dip in price and growing negative sentiment in options trading, XRP continues to demonstrate relatively strong order book depth. This means large trades can be executed without significantly affecting the price, offering a degree of liquidity and stability compared to other altcoins such as Solana (SOL).

Order book depth is a key metric for institutional investors, as it reflects market robustness and the ability to handle high-volume transactions. This has fueled some of the optimism around XRP’s potential to be next in line for a U.S.-based spot ETF. However, while depth may help reduce volatility under normal conditions, it might not be sufficient to counteract prevailing bearish momentum if broader market pressure intensifies.

ETF Approval Still Speculative

Talks of a spot XRP ETF have energized the XRP community, but the regulatory landscape remains complex. While Bitcoin and Ethereum ETFs have already cleared regulatory hurdles, XRP’s legal history with the U.S. Securities and Exchange Commission (SEC) still casts a shadow over its candidacy.

Although XRP has seen some legal victories, any forthcoming ETF approval would require further clarity from regulators. Until then, optimism around an XRP ETF remains largely speculative and could be premature as a bullish catalyst, especially in a market currently dominated by cautious institutional behavior.

Broader Market Dynamics May Influence XRP’s Path

XRP’s short-term direction will also depend on macroeconomic factors affecting the overall crypto and financial markets. Investor risk appetite remains sensitive to global monetary policy decisions, inflation data, and geopolitical uncertainties. These external pressures often play a larger role than individual asset fundamentals in determining price movements.

For now, the combination of bearish options activity, technical breakdowns, and lack of ETF certainty outweighs the positive sentiment generated by order book depth and speculative ETF enthusiasm.

Watch the Data, Not Just the Hype

While XRP’s potential for a spot ETF listing is certainly an exciting prospect, traders and investors should remain cautious. The options market—often a more sophisticated segment of crypto trading—reveals a clear tilt toward defensive strategies and hedging behavior. Add to that a recent technical breakdown, and the short-term outlook remains clouded with downside risk.

Market participants would do well to monitor not just the headlines, but also key metrics such as options skew, order book dynamics, and support levels. Until there’s concrete regulatory movement or a shift in broader sentiment, the path forward for XRP remains uncertain—and potentially volatile.