As a seasoned analyst with over two decades of experience in the financial markets, I’ve seen my fair share of bull runs and corrections. Looking at XRP‘s current price action, it appears that we might be witnessing the early stages of a correction.
Over the past day, XRP (XRP) has experienced a significant boost of approximately 26.50%, reaching $1.95 on November 30, marking its highest point since April 2021. This surge seems to be fueled mainly by speculation that the New York Department of Financial Services (NYDFS) may give the green light to Ripple’s RLUSD stablecoin in December.
In the upcoming days, it seems that at least three key indicators for XRP suggest a potential end to its bullish momentum, possibly leading to a 20% drop from its current prices.
XRP price hits ascending channel’s resistance
The first signs of an impending XRP price correction come from its prevailing ascending channel.
On November 30th, XRP hit the resistance point within its upward trending channel, increasing the possibility of a short-term price adjustment. This is similar to how XRP has corrected in the past when it reached this resistance level, as shown in the diagram.
As an analyst, I’ve noticed that XRP’s Relative Strength Index (RSI) on the 4-hour chart has surged beyond 80, indicating a possible saturation of buyers. In the past, similar RSI levels have been followed by price declines.
Moving downward might challenge the support around $1.75, which coincides with the lower boundary of the channel’s trendline, or potentially even dip to the 50-EMA at approximately $1.48, representing a decrease of nearly 20% from the current price points.
XRP whales are selling at the highs
The number of whales (large-scale investors) owning at least 100,000 units of XRP has been reducing, coinciding with the token’s approach to its latest peak values.
Data recorded on the blockchain indicates that the amount of XRP held by large wallets reached a maximum of approximately 90.7 billion XRP on November 24th. Subsequently, there was a decrease of around 30 million XRP, suggesting that some major XRP holders may be offloading their coins at these elevated prices that have not been seen for several years.
This action aligns with XRP’s price approaching the resistance level of its rising trendline, which is now around $1.90, potentially strengthening the bearish outlook for a potential 20% drop in its value by December.
Overleveraged XRP risks long liquidation
Over the last day, there’s been a significant surge of 37% in the number of active contracts (open interest) for XRP derivatives, reaching an all-time high of $3.19 billion. This suggests that there’s been a substantial rise in speculative trading within the market.
According to analyst JA Maartun from CryptoQuant’s data platform, the rise in Open Interest (OI) for XRP resembles a pattern that occurred before a 17% price drop between November 23 and 26. He cautions that this could be indicative of a price surge fueled by high leverage, which may result in forced liquidations of long positions.
Positions that are leveraged come with a liquidation price, which refers to a certain price threshold at which the trader’s security deposit (collateral) becomes inadequate to cover the potential losses. In such cases, the trading platform will automatically close the position and sell off the trader’s assets as a means of covering the losses.
If XRP prices drop significantly, it could lead to a large number of traders who have borrowed excessively being forced to sell their positions at once. This mass selling can cause an influx of XRP onto the market, which in turn might exacerbate the downward trend in prices.
Read More
- CAKE PREDICTION. CAKE cryptocurrency
- FLOKI PREDICTION. FLOKI cryptocurrency
- OM PREDICTION. OM cryptocurrency
- OKB PREDICTION. OKB cryptocurrency
- TRB PREDICTION. TRB cryptocurrency
- XDC PREDICTION. XDC cryptocurrency
- DMTR PREDICTION. DMTR cryptocurrency
- API3 PREDICTION. API3 cryptocurrency
- CTK PREDICTION. CTK cryptocurrency
- Dandadan Shares First Look at Season Finale: Watch
2024-11-30 17:13