As a seasoned researcher with years of experience in the crypto market, I must say that the recent downturn in XRP‘s price is not entirely unexpected. The cryptocurrency world has always been unpredictable, and the rapid rise and fall of prices are part of its unique charm.
In the past 24 hours, XRP’s value has dropped by 13%, currently trading at approximately $2.30 on December 5th. Contrastingly, Bitcoin (BTC) has broken through the $100,000 barrier and is moving in an upward direction.
The drop in the XRP price is part of an adjustment process that began on December 3, resulting in a 25% decrease in value since it peaked at a multi-year high of $2.90.
Over the given timeframe, XRP’s market cap decreased by about 8%, falling to approximately $133 billion. As a result, it dropped below Tether USD (USDt), placing it at the fourth spot in terms of market capitalization.
Let’s look closer at the factors behind XRP’s ongoing sell-off.
XRP wipes out all December gains against Bitcoin
As a researcher, I’ve noticed an interesting trend in the crypto market: My analysis shows that XRP has significantly outperformed Bitcoin since November. Specifically, XRP has surged approximately 354% from November 1 to December 5, while Bitcoin only experienced a 45.5% increase over the same period.
Consequently, the value of XRP has climbed up relative to Bitcoin during November, peaking at a 3.5-year high of 0.00003012 on December 3, boosted by increased network usage and an optimistic overall market mood.
Since December 5th, this ratio has significantly decreased to 0.00002334, effectively erasing all the progress or gains made from December 1st through December 3rd.
As a crypto investor, it was quite thrilling to witness the unprecedented surge that propelled Bitcoin’s price beyond the eagerly awaited $100,000 threshold, reaching an astounding new peak of approximately $104,000.
On December 5th, a significant number of long XRP positions worth over $12.79 million were closed (liquidated), while around $7 million in short positions were liquidated. This imbalance could have played a role in putting pressure on the price to decrease.
The liquidation of long-term contracts on XRP occurs hand-in-hand with a decrease in the daily futures’ open interest (OI), now standing at approximately $4.3 billion – a significant reduction from yesterday’s figure. Despite this recent dip, it is worth noting that the current OI levels are still substantial compared to the $722 million recorded just a few days ago in early November.
Over the last 24 hours, the funding rate for XRP, which is a measure of trader sentiment, has risen from 0.0163% to 0.0553%. This increase indicates that traders might be gearing up for another round of bullishness towards altcoins like XRP.
Bull flag suggests XRP’s upside is not over
Looking at the technical aspect, the movement in XRP’s price has resulted in the creation of a ‘bull flag’ chart pattern over a four-hour period, as illustrated here.
A bull flag is a bullish continuation setup that forms after the price consolidates inside a down-sloping range following a sharp price ascent.
After the price breaks above its flag’s upper trendline ($2.37) with a firm close, the pattern is expected to resolve positively, potentially rising by an amount equivalent to the previous uptrend’s height.
This puts the upper target for XRP price at $4.83, a new all-time high.
Instead, we can say that XRP’s Relative Strength Index (RSI) has decreased from overbought levels at 82 to 52 between Dec. 3 and Dec. 5. If this downward trend in RSI continues, it could potentially increase the likelihood of a more significant price drop.
Consequently, if there’s a withdrawal from the current $2.37 price level, it might lead to another test of the lower trendline of the flag near $2.05. This area is also coincident with the 50-period simple moving average (SMA). If the price continues to drop below that point, it could potentially challenge the support provided by the 100 SMA around $1.68.
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2024-12-05 12:15