XRP hits new highs as spot slippage on exchanges soars, a critical moment for traders interested in altcoins. As slippage is highest around these peaks, caution is advised.

The recent surge in trading activity points to increased market volatility, which can present opportunities but also significant risks. As XRP approaches its 2021 high, the risk increases for those looking to go long.

Traders need to monitor potential pullback levels to consider entering, especially if XRP sustains near these highs.

XRP Potential Entry Areas

XRP surged more than 230% in two weeks, erasing a three-year slump and proving the power of precise timing in the broader altcoin market.

Such a rapid rise, with virtually no retracement, highlights the importance of strategic entry and exit points in cryptocurrency trading.

For XRP in particular, the frenzy has yet to cool down, suggesting that current levels may not be suitable for new long positions.

The $1 to $1.20 range is a more suitable entry point and traders are advised to hold off on entering the market and wait for a possible pullback to these levels.

This vigilance in timing is critical to maximizing gains and managing risk in the volatile altcoin markets.

The move highlights the dynamic nature of cryptocurrency valuations, and those who stay informed can take advantage of rapid changes.

Liquidation Levels and Cryptocurrency Liquidity

XRP’s most critical liquidity threshold is a $3.6 million leveraged order that hinges on the $1.6 price point, while a larger $4.6 million order awaits $1.52.

Such dense liquidation levels often signal that price is approaching potential reversal zones. These key areas have just formed below current trading prices and could catalyze key market shifts.

This dynamic indicates that leveraged trading of XRP is highly risky, as large swings in these key liquidity areas can trigger rapid price changes.

Additionally, liquidity tends to target large-cap altcoins like XRP first, which are seen as more stable investments due to their good performance during the 3-year consolidation.

In fact, XRP served as a gateway for capital to enter the altcoin market before spreading to smaller, more volatile assets.

The initial flow sets the stage for subsequent gains in other currencies, reflecting the cyclical nature of liquidity movements.

This week, XRP is up 3x, XLM is up 6x, and DOGE is up 5x. This surge highlights how liquidity flows can greatly influence asset prices in the cryptocurrency space.

Where is XRP price headed next?

XRP’s recent rally has shown a typical five-wave impulse with clearly discernible sub-waves. This pattern confirms that the cryptocurrency has likely hit an absolute bottom at the November low of $0.49, which has laid a solid foundation for its current uptrend.

The impulse wave structure suggests that the cryptocurrency is at a critical juncture and its future movement depends on whether it maintains a specific price level.

The first possibility is a failure to maintain its position above $1.05, which is the origin of the fifth sub-wave in the current impulse structure. A breakout above this level would confirm that the XRP price is in a larger wave 2 correction.

According to the Elliott Wave Theory, waves 2 and 4 are corrective waves, while waves 1, 3, and 5 are major bullish waves. Until then, while this correction is bearish in the short term, it will set the stage for a stronger wave 3 rally in the future.

If the XRP price can sustain above $1.05, it would indicate that the fifth sub-wave is extending. In this case, analysts predict that the XRP price will break through the $2 mark before a significant correction.