- XRP formed an inverse head-and-shoulders pattern as derivative volumes surged
- Leverage and network activity hinted at bullish follow-through above the $2.20 resistance
XRP, at the time of writing, seemed to have entered a period of low volatility, with the Bollinger Bands tightening on the 4-hour chart. This could be seen as a classic precursor to a significant breakout.
In fact, the altcoin’s price has continued to consolidate between $2.04 and $2.08 – A sign of minimal momentum in either direction.
However, history shows us that such volatility compressions often lead to explosive movements. Therefore, the market is likely to watch the altcoin closely. Especially since multiple metrics seemed to hint at a potential breakout scenario.
Is XRP’s structure setting up a bullish reversal?
The 4-hour chart revealed an inverse head-and-shoulders pattern, a formation often associated with bullish reversals. Its neckline aligned closely with the $2.20 resistance level – A zone XRP has failed to break multiple times throughout April.
However, the ongoing squeeze in Bollinger Bands confirmed a volatility buildup that typically precedes strong directional moves.
At press time, XRP was trading at $2.12, following gains of 2.95% in 24 hours, while maintaining its price strength above $2.07. Therefore, if the bulls manage to clear $2.20, the next significant level would sit at $2.48, based on the altcoin’s recent highs.
Source: TradingView
Are derivatives traders preparing for a breakout?
Momentum in the derivatives market has rapidly intensified too, providing further validation to the ongoing bullish setup. Trading volume spiked by over 70%, with the same standing at $4.22 billion at press time. Similarly, the Open Interest grew by 5.91% to $3.32 billion – A sign of fresh inflows into XRP positions.
More importantly, Options markets are exploding with activity, with volumes surging by 177.77% and Options Open Interest climbing by 60.77% – Indicative of heightened expectations of volatility and directional movement.
These sharp hikes implied that market participants are aggressively positioning themselves ahead of a possible breakout, with a clear bias favoring upside continuation.
Source: Coinglass
Will leverage and liquidations drive the next move?
Leverage metrics are equally significant in reinforcing the bullish sentiment building around XRP. The estimated leverage ratio climbed by 1.04%, revealing a subtle but noteworthy uptick in traders’ willingness to take on risk.
Source: CryptoQuant
Additionally, the 24-hour liquidation heatmap uncovered dense short liquidations between the $2.15 and $2.20 zone. This meant that a breakout above this range could result in a sharp liquidation cascade.
Such events often lead to sudden upward price spikes as short sellers are forced to close their positions.
Is network activity reinforcing this bullish setup?
While technical and derivatives indicators seemed to build a bullish narrative, on-chain data added another layer of validation. In the last 24 hours alone, active addresses increased by 1.37% to hit 24.75k. Similarly, total transaction count rose by 0.94%, with the same standing at 1.48 million.
These modest but consistent gains highlight rising user activity and network utility, both of which are essential for sustaining bullish momentum beyond speculative phases.
Additionally, the uptick in organic participation suggested that market demand has been healthy, justifying any short-term price surges.
Source: CryptoQuant
Conclusion
With a bullish chart structure, surging derivatives volumes, hike in leverage, and healthy on-chain activity, XRP might be exhibiting one of its strongest breakout setups in recent weeks. The key now lies in how price reacts to the $2.20 resistance.
If bulls successfully flip this level into support, the likelihood of a rapid rally towards $2.48 becomes far more realistic. Therefore, XRP’s convergence of bullish signals could finally translate into a breakout. Especially if buyers maintain pressure and capitalize on the prevailing market momentum.
