Author: Nancy Lubale, CoinTelegraph; Translated by: Deng Tong, Golden Finance
Ripple’s XRP surged past the $1 mark to a three-year high of $1.26 in recent days on expectations of a favorable regulatory environment for cryptocurrencies and a possible resolution to its long-running legal dispute with the U.S. Securities and Exchange Commission (SEC).
However, XRP prices have since fallen back significantly, raising questions about whether $1.26 is the top, at least for now.
XRP/USD daily chart. Source: TradingView
XRP whales take profits
XRP pulls back on November 11 According to data from Whale Alert, there were 17 transactions with massive inflows worth tens of millions of dollars into Bitstamp and other exchanges.
This included a whale moving 10 million XRP tokens worth $11.3 million to the Bitstamp cryptocurrency exchange. The transfer may have been part of an attempt by investors to cash in on gains following XRP’s sharp rise.
Source: Whale Alert
The timing of these large XRP transfers to exchanges is noteworthy as it coincides with a key shift in the distribution of XRP holdings.
Specifically, the supply of XRP on exchanges has increased significantly, as evidenced by data from CryptoQuant. The chart below shows that the balance of XRP on exchanges grew by 3% between November 6 and November 16.
Note that exchanges’ reserves of XRP increased by 44 million XRP between November 13 and November 16. Meanwhile, XRP rose by 56% during the same time frame.
Exchange reserves of XRP. Source: CryptoQuant
This suggests that there may have been a lot of profit taking that has pushed XRP down 13% since its Nov. 16 high.
Additionally, Santiment explained that retail traders have also been selling on “any minor XRP rallies,” and the rally to $1.26 was no different.
“Wallets holding less than 1 million XRP sold a total of 75.7 million tokens ($87.9 million) over the past week,” the on-chain data provider said in a Nov. 17 post.
Interestingly, the tokens sold by retail traders were bought up by whales and mega wallets holding between 1 million and 100 million tokens, a potential bullish sign for the future.
Santiment noted:
“In total, this group has amassed 453.3 million tokens ($526.3 million) in the past week alone.”
XRP whale wallet holdings. Source: Santiment
Meanwhile, volatility caught long traders off guard when XRP deviated sharply from its multi-year high of $1.26.
Data from CoinGlass shows that on November 17, XRP derivatives markets saw over $12.6 million worth of liquidations, of which $9.1 million were longs, and this figure is still ongoing as of press time.
In the past four hours alone, more than $3.9 million in leveraged long positions were liquidated.
XRP liquidation. Source: CoinGlass
When long positions are liquidated, it usually involves selling assets (either voluntarily or by brokers), which further drives prices down.
XRP Price ‘Overbought’ Across Multiple Timeframes
According to data from CoinGlass, XRP’s RSI heat map currently shows overbought conditions on four out of six time frames.
In contrast, Bitcoin’s RSI is overbought on three of the six time frames.
Cryptocurrency market RSI heat map. Source: CoinGlass
Overbought conditions typically describe the recent behavior of an asset's price and reflect expectations that the price trend may soon correct.
But while the popular indicator shows potential overheating risks, traders believe XRP’s price rally is not over yet.
“It’s still early in the cycle for XRP like this,” independent trader Chris McCrypto said in a Nov. 16 article about X, adding that XRP could go as high as $15-$20.
Meanwhile, anonymous analyst CryptoCharged believes that the ongoing pullback has set the price up “perfectly” for a retest of key levels, adding that a drop to the $0.65 and $0.75 areas would reset the chart to move higher again.
Source: CryptoCharged
