XRP Faces Continued Pressure Amid Negative Funding Rates and Geopolitical Concerns

XRP has experienced a significant decline, extending its losses for a fourth consecutive day, with its price hovering around $1.422, marking a weekly decline of over 6%. The downturn is attributed to negative funding rates in perpetual futures and rising U.S. Treasury yields, which have created a challenging environment for buying interest in the cryptocurrency.

According to CoinGlass, XRP's long-to-short ratio was recorded at 0.88, indicating a slight inclination towards short positions. The funding rates have also been consistently negative, with XRP's rate dropping to -0.0022% on Thursday. This negative funding suggests that shorts are paying longs, reflecting a stronger demand for bearish positions.

Adding to the market's unease are geopolitical tensions, particularly reports of potential U.S. military actions against Iran. These developments have contributed to a defensive market posture, further diminishing appetite for cryptocurrencies like XRP.

Despite the ongoing decline, XRP remains above key daily exponential moving averages, with immediate support at the 50-day EMA near $1.400. However, momentum indicators show weakness, with the RSI around 45 and the MACD below zero. A sustained break below these support levels could lead to further declines, with potential targets at $1.336 and $1.300.

New Developments in XRP Lending

• A debate has emerged between Ripple CTO Emeritus David Schwartz and Flare CEO Hugo Philion regarding the potential of XRP Ledger lending.
• XRP Ledger lending is a feature allowing users to lend and borrow assets directly on the blockchain, with validators currently voting on the XLS-66 proposal.
• Schwartz emphasizes that early developers have significant opportunities as no one has fully utilized the lending feature yet.
• Philion argues that lending could become much larger than Schwartz anticipates, citing the potential for external infrastructure to connect with the XRP Ledger.
• Flare plans to implement its own lending logic independently of XRPL upgrades, utilizing Protocol Managed Wallets and the Flare Confidential Compute stack.
• Evidence of demand for lending is indicated by $7.95 million borrowed in Ripple’s RLUSD stablecoin against 10.8 million wrapped XRP (FXRP).
• Currently, three addresses hold approximately 93% of the debt in Morpho pools, highlighting a concentration in the lending market.
• The RLUSD supply is around $2.53 billion, suggesting potential for market growth if XLS-66 is approved.
• Borrowers currently owe $7.96 million in RLUSD with a 4.30% borrow rate and a 4.71% lend rate.