The price of XRP reaches 43-month highs, but is the rally over?
Technical analysis of XRP suggests a possible 20% drop in December, with over-leveraged positions likely exacerbating downward pressure.
XRP
XRP
tickers down
€2.24
has risen 26.50% in the last 24 hours, reaching $1.95 on November 30, its highest level since April 2021. Its surge is mainly due to rumors that the New York Department of Financial Services (NYDFS) will approve Ripple's RLUSD stablecoin in December.
However, at least three indicators of XRP point to bullish exhaustion in the coming days, which could result in a 20% correction from current levels.
The price of XRP reaches the resistance of the ascending channel.
The first signs of a correction in the price of XRP come from its prevailing ascending channel.
On November 30, XRP reached the resistance level of that ascending channel, increasing the likelihood of a short-term correction. This is similar to previous corrections of the cryptocurrency after reaching the same resistance level, as illustrated below.
XRP whales are selling at highs.
Whale addresses holding at least 100,000 XRP have decreased their balances as the token approaches its recent local highs.
On-chain data from Messari shows that the supply held by these large wallets peaked at 90.73 billion XRP on November 24 before decreasing by 30 million XRP, indicating that some whales are selling at these multi-year highs.
The movement coincides with the price of XRP approaching the resistance of its ascending channel, currently at $1.90, reinforcing the bearish scenario for a price drop of 20% in December.
Over-leveraged XRP risks long liquidations.
The XRP derivatives market has seen a 37% increase in open interest (OI) in the last 24 hours, reaching a record $3.19 billion, indicating greater speculative activity in the market.
JA Maartun, an analyst from the on-chain data platform CryptoQuant, said that the increase in XRP's OI is similar to one that preceded a 17% drop between November 23 and 26, noting that the "leverage-driven pumping" of the cryptocurrency could lead to long liquidations.
Leveraged positions have liquidation prices, which are specific price levels where the trader's collateral is insufficient to cover losses. At this point, the exchange automatically closes the position, liquidating the trader's assets.
If XRP prices drop quickly, many over-leveraged traders may simultaneously hit their long liquidation thresholds. This forces the trader's collateral to be sold in the market, accelerating price declines.