XRP Faces Bearish Pressure as CME Denial and Weakening Momentum Spark Concerns

As optimism wanes and bearish signals emerge, Ripple's XRP finds itself on precarious ground. While early January 2025 brought a rally fueled by institutional adoption hopes under the Trump administration, recent developments have cast doubt on XRP's short-term prospects.

• CME denies XRP futures listing, signaling a lack of institutional interest beyond Bitcoin (BTC) and Ethereum (ETH).

• Technical indicators reveal weakening momentum, suggesting potential price declines.

• Short-term profit-taking intensifies, with $500 million in realized gains reported within 48 hours.

• XRP risks a 20% decline if it fails to maintain critical support at $2.90.

XRP/USDT price chart | Source: KuCoin

Despite its earlier surge to $3.40, XRP's momentum is showing signs of exhaustion. Key technical indicators point to rally fatigue:

1. Mayer Multiple: This metric, comparing spot prices to the 200-day moving average, shows a bearish divergence as it lags behind December’s highs.

2. MACD Histogram: Lower highs on the MACD suggest weakening bullish momentum, aligning with a potential price reversal.

3. Doji Candlestick Formation: XRP's recent price action reflects indecision, a common precursor to downward trends.

XRP is trading at $3.05, marking a 4% drop within 24 hours. Analysts warn of a potential slide to $2.62, near its 50-day Simple Moving Average (SMA), if current trends persist.

Read more: XRP Poised for $10–$50 Surge Pending Spot ETF Approval

The Chicago Mercantile Exchange (CME) swiftly denied plans to list XRP futures, disappointing investors banking on greater institutional participation. CME’s decision underlines its focus on BTC and ETH, raising concerns about the readiness of institutions to explore alternative cryptocurrencies.

This setback undermines the bullish sentiment sparked by Ripple CEO Brad Garlinghouse's recent meeting with President Trump, which had fueled speculation about regulatory support and ETF approvals for XRP.

Adding to XRP’s challenges, Better Markets, a nonprofit advocating for financial market reform, filed an Amicus Brief supporting the SEC’s appeal in the Ripple lawsuit. The organization argues that XRP tokens qualify as securities under the Howey Test, emphasizing potential harm to investor protections.

Better Markets’ critique includes:

• Investment Contract Classification: The brief contends that XRP’s programmatic sales satisfy the Howey Test, regardless of whether investors acquired XRP directly or on secondary markets.

• Retail Investor Sophistication: It questions retail investors' ability to fully understand their expectations of profit in connection with Ripple's efforts.

• Potential Impact on Securities Laws: The organization warns that Judge Torres’ ruling on XRP sales could weaken securities regulations designed to protect investors.

This development introduces fresh uncertainty into the lawsuit, which remains a focal point for the crypto industry. A favorable ruling for Ripple could significantly bolster XRP, while a prolonged legal battle may weigh on investor sentiment.

Read more: What Is an XRP ETF and Is it Coming Soon?

Source: X

The XRP community received a cautionary note from XRPScan, a popular XRP Ledger explorer. The alert addressed widespread speculation about an XRP account allegedly affiliated with the U.S. Treasury. XRPScan emphasized the importance of verifying claims before engaging with accounts on the public ledger.

Ripple CTO David Schwartz and prominent XRPL developer Wietse Wind echoed the warning, clarifying how users can verify the connection between accounts and their claimed domains. The incident highlights the risks of misinformation and the need for diligence in the XRP ecosystem.

XRP OI-weighted funding rate | Source: CoinGlass

Santiment data reveals a significant shift in XRP market dynamics:

• Short-term holders offload positions, realizing $500 million in profits over the past two days.

• Dormant circulation rises across 90-day, 180-day, and 365-day metrics, signaling increased selling activity.

• Declining open interest (OI): XRP's OI has dropped from its January high of 2.34 billion XRP to 2.14 billion XRP, indicating reduced trading enthusiasm.

Exchange flow data presents a mixed picture. While Binance and Kraken reported net outflows (indicative of buying pressure), Coinbase and Bitstamp saw net inflows, suggesting selling activity remains a concern.

XRP's immediate outlook hinges on its ability to hold above $2.90. A breakdown below this level could trigger a 20% decline to $2.62. Conversely, breaking above the descending trendline from January 16 could invalidate bearish predictions and propel XRP to a new all-time high above $3.55.

Additionally, the SEC's ongoing appeal in the Ripple lawsuit adds another layer of uncertainty. While a resolution favoring Ripple could reignite bullish sentiment, any delays or unfavorable outcomes may weigh heavily on XRP.

XRP’s rally earlier this month demonstrated its potential to capture market attention, but emerging challenges reveal a fragile foundation. Institutional hesitation, profit-taking, and bearish technical signals are key factors that could drive further declines.

Investors should monitor critical support levels and regulatory developments closely. With volatility likely to persist, XRP's path forward remains uncertain, making it a focal point for traders and market watchers alike.

Read more: XRP Sustains the Buying Pressure, Trump Receptive To Strategic Reserve With US-Based Cryptos and More: Jan 17