XRP’s Rapid Price Rise: Is the Bull Run Sustainable or Fizzled Out?
XRP has gained over 17% in the past day, taking its market cap to a new all-time high of $153.13 billion on Dec. 3. This rally has been supported by growth in active wallets and transaction volume, as well as an increase in trading volume. However, on-chain data suggests that the bullish trend may be fading. While retail investors are fueling the current rally, rising institutional skepticism could be a drag on XRP’s near-term price action.
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Source: TradingView
Santiment data shows that retail investor participation has been the main driver behind the recent XRP price surge. This can be seen from the active wallet addresses increasing by over 116,000 in the last 24 hours, indicating that more and more people are participating in the purchase of the coin. XRP surged in market action, with its trading volume increasing by 93.29% over the same period, as shown by: This increase in retail trading came after the US elections, which were positive for the crypto market, especially due to political certainty, leading to increased buying pressure for assets like XRP.
XRP’s Retail-Driven Rise
XRP’s market cap has surpassed $155.69 billion, indicating that the token continues to rise in the crypto space. Retail investors have been buying XRP in the post-election momentum, pushing its price higher. In contrast, institutional investors, also known as ‘whales,’ have been less active than their retail counterparts in recent days.
While XRP continues to trend upwards in price, activity from institutional investors indicates increasing concern. A key sign of this caution is the decline in stablecoin reserves, which currently account for 53.993% of total circulation and have decreased compared to previous months, reflecting more cautious behavior from major market players. Larger and more active investors, known as whales, typically dominate the cryptocurrency market, and their lack of interest in adding new assets could limit XRP’s upward movement.
Institutional investors are still quite cautious according to technical analysis. The trend following MACD indicator indicates a bearish crossover with the MACD line crossing below the signal line. This indicates that the price is likely to fall after such a technical pattern as this pattern usually precedes a price pullback. Also, the MACD histogram has crossed into the negative territory, indicating that the market is still in a downtrend.
Source: Tradingview
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XRP’s Profit-Loss Ratio Concerns
Added to this is the on-chain profit-loss ratio, which reveals how much profit traders are making and how much they are losing. The metric was recently at around 0.374, indicating that just over a third of investors who were part of the rally sold their tokens. During a price rally, this low profit-loss ratio raises concerns among market analysts that traders are hesitant to take long positions. In other words, while the tokens may be tremendously successful in the short term, many traders are skeptical of the sustainability of the growth.
The lack of strong buying and negative technical signals suggest that XRP’s price may struggle to hold onto its gains in the coming days. The market’s inability to accommodate further long positions means that the bull rally may falter unless a new driver emerges.
Source: Santiment
XRP at a Crossroads
Such changes could be brought about by WisdomTree’s recent application for a spot XRP exchange-traded fund (ETF). If such a product wins regulatory approval, it could open the door to more institutional investment, which the token needs to improve its liquidity. Institutional investors are generally more cautious, and favorable regulation could convince them to invest more in the token.
Source:Ripple
However, the short-term price rally of XRP is not uncertain and the market is still quite uncertain. Retail investors are pushing the price higher, but institutional investors are becoming more cautious and technical signals are negative. As the market processes these signals, XRP is at a turning point. If retail sentiment remains positive and stronger than institutional skepticism, it is quite possible that the token will continue to rise further. However, the sustainability of the rally will depend on declining on-chain metrics and technical analysis resistance.
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