Ripple traders reduce leverage amid price drop to $0.59

Ripple (CRYPTO:XRP) traders have scaled back their high-leverage positions following a recent price dip from $0.63 to $0.59. 

Earlier in August, XRP's price climbed to $0.63, sparking optimism among traders that a significant breakout was imminent. 

However, as the price fell, traders began retreating from high-risk bets, reflecting growing caution in the market.

According to data from CryptoQuant, the Estimated Leverage Ratio (ELR) for XRP has decreased to 0.060, indicating that traders are now employing lower leverage in their positions. 

A high leverage ratio usually signals confidence in a strong price movement in a particular direction. 

However, the recent drop in ELR suggests that traders are becoming more skeptical about XRP's near-term price action and are avoiding the risk of liquidation associated with high-leverage trades.

This shift in trader behavior coincides with a broader decline in bullish sentiment toward XRP. 

The Weighted Sentiment metric, provided by on-chain analytics platform Santiment, is nearing negative territory, indicating that market participants are increasingly pessimistic about XRP's prospects. 

A further decline in this metric could weaken demand for XRP, potentially leading to a drop below the price of $0.59.

The recent rally in XRP's price was partly fueled by developments in the ongoing Ripple-SEC lawsuit. 

However, despite expectations of further gains, XRP faced resistance and failed to maintain its upward momentum. 

The Stochastic Relative Strength Index (Stoch RSI), a momentum indicator, currently reads 87.24, suggesting that XRP is in an overbought condition. 

This could result in a price pullback to around $0.55 if selling pressure increases.

On the other hand, if buying pressure intensifies or the broader altcoin market experiences a rally, XRP's price could rebound towards the $0.63 level. 

Traders and investors are closely watching these key levels to determine the next move for Ripple.

At the time of reporting, the XRP price was $0.6101.