XRP's Price Surges 13% on ETF Hopes, But Bears Eye $1.20

XRP, the cryptocurrency associated with Ripple, has been experiencing a mix of optimism and pessimism in recent days. Despite the optimism surrounding the potential approval of an XRP exchange-traded fund (ETF), there are persistent fears of a downside for the cryptocurrency. The recent price movement of XRP suggests a possible re-test of lows around $1.6, despite its strong order book depth. This indicates that while there is significant interest in XRP, there are also concerns about its future performance.

The optimism surrounding an XRP ETF has been fueled by the recent debut of the ETF on NYSE Arca, which led to a 13% rally in XRP's price above $2. However, technical analysis warns of a potential downside to $1.20. This discrepancy between the optimism and the technical indicators highlights the uncertainty surrounding XRP's future price movements. Key support levels for XRP are identified at $1.964 and $1.899, with the price chart showing bearish sentiment as prices near the lower Bollinger band. This suggests that while there is potential for growth, there are also significant risks involved.

The persistent fears of a downside for XRP are further supported by the options data, which shows a significant amount of put options being purchased. This indicates that traders are preparing for a potential decline in XRP's price. The bias for puts was evident from negative skews across the timeframes. Options skew measures the implied volatility premium (demand) for calls relative to puts. A put option provides insurance against price drops, and traders purchase the same when looking to hedge or profit from an expected price drop.

Earlier this week, analysts said that XRP has a relatively better order book depth, implying ease in trading large orders at stable prices, compared to Solana's SOL and other tokens. This meant that the payments-focused coin used by Ripple to facilitate cross-border transactions could be the next digital asset to get a spot ETF approval in the U.S. However, the back-and-forth strategy of the US President has left investors uncertain about the next steps, with many remaining fearful about a recession. This uncertainty has contributed to the bearish sentiment surrounding XRP, as investors are cautious about the potential impact of economic instability on the cryptocurrency market.

Despite the bearish sentiment, there are also signs of optimism in the market. The recent rally in XRP's price above $2, fueled by the ETF debut and the tariff pause, suggests that there is still significant interest in the cryptocurrency. However, the technical indicators and the options data highlight the risks involved in investing in XRP. As such, investors should approach the cryptocurrency with caution, taking into account both the potential for growth and the risks of a downside.