Quick overview
- XRP has experienced a significant drop after breaking through a support level, settling around $2.06.
- The bearish setup is confirmed by a failed retest and a head-and-shoulders formation.
- Options traders are showing caution, with increased demand for downside protection as the SEC’s decision on a spot XRP ETF approaches.
- The launch of a 2x leveraged XRP ETF by Teucrium may influence the SEC’s stance on trade objections.
Live XRP/USD Chart
XRP/USD
XRP had been largely stable around the $2 mark amid ongoing volatility in the cryptocurrency market, fluctuating around the support level.
However, that support weakened, leading to a dramatic drop that completed a head-and-shoulders formation and broke through the neckline. After this, the retest failed, and XRP began trending lower, settling at approximately $2.06 in the Asian trading session on Friday.
This rejection suggests a potential build-up of downside momentum and confirms a bearish setup.
Options traders on Deribit are exercising caution despite a series of positive developments surrounding XRP. Data from Kaiko reveals that the implied volatility (IV) smile for XRP options expiring on Friday, April 18, shows a significant leftward skew.
This indicates higher demand for downside protection, particularly as investors buy out-of-the-money (OTM) puts, especially at strike prices of $1.5, where implied volatility can reach 160 percent.
This cautious approach is largely influenced by the SEC’s upcoming decision regarding Grayscale’s application for a spot XRP ETF, due by May 22, a few weeks after the April options expiration.
Traders seem to be positioning themselves defensively, projecting a potential delay or denial from the SEC. Additionally, Teucrium has recently launched a 2x leveraged XRP ETF, which some analysts believe could weaken any objections the SEC might raise against a trade.
Olumide Adesina
Financial Market Writer
Olumide Adesina is a French-born Nigerian financial writer. He tracks, analyzes, and reports changes in financial markets with over 15 years of working experience in investment trading.
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