XRP price has increased by over 300% in the past two months and traded at $2.10 on December 28. However, warning signs indicate that the XRP/USD price may erase at least 25% of this gain in the short term.
Daily XRP/USD chart | Source: TradingView
XRP is about to break the descending triangle pattern
The recent decline of XRP occurs as its price trades within a descending triangle pattern, a bearish structure that often signals further declines.
This pattern is characterized by a series of lower highs forming the descending trendline of the triangle, while the $2.10 level serves as horizontal support.
Daily XRP/USD chart | Source: TradingView
A decisive break below the $2.10 support level could open up the possibility of a deeper correction. The potential bearish target for this breakdown is calculated by subtracting the height of the triangle from the breakout point, according to technical analysis rules.
In other words, XRP price could drop to around $1.64 by January 2025, a decrease of approximately 25% from the current price.
XRP whales are selling off
On-chain data further clarifies bearish prospects, with whale address tracking metrics indicating distribution sentiment.
Specifically, the supply of XRP held by the wealthiest investors – those with balances over 1 million tokens – has decreased by 180 million since the beginning of December.
XRP supply in addresses with balances over 1 million | Source: Messari
Meanwhile, the supply of entities with a balance of 100,000 XRP has decreased by 170 million. The decline in supply from both of these address groups aligns with XRP's more than 26% drop from the local peak price of $2.90.
XRP supply in addresses with over 100,000 | Source: Messari
Large-scale sell-offs by whales could create downward pressure due to the increased token supply in circulation. Combined with the bearish trend, this indicates that selling activity has outpaced demand.
XRP supply on Binance increases
Additionally, XRP reserves on Binance, the largest cryptocurrency exchange by trading volume, have steadily increased since mid-December, which is often a bearish signal as it typically precedes corrections.
XRP balance on Binance exchange | Source: CryptoQuant
The increase in exchange reserves reinforces the story of profit-taking at local highs, contributing to XRP's current bearish momentum.
Unless this trend reverses, XRP price may face a 25% decline risk as supply on exchanges increases and large investors continue to sell off.
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