Whale transactions cause recent price fluctuations

XRP has experienced significant price volatility recently, largely due to large investors known as "whales." Over the weekend, these whales purchased approximately 160 million XRP, worth approximately $380 million, causing the recent price surge. However, after hitting a high of $2.80, some traders began to take profits, resulting in long liquidations totaling more than $20 million as positions were closed due to market volatility. This selling pressure has created a complex market environment for XRP, as whales continue to buy while many other investors sell.

Positive Outlook for XRP ETF Approval

Bitwise analysts say an XRP exchange-traded fund (ETF) could be approved by the SEC in 2025, driven by increased interest from retail investors and potential regulatory changes. As Ripple faces ongoing legal challenges, several companies, including Bitwise and WisdomTree, have applied for an XRP ETF. The upcoming U.S. presidential election may also affect the way the SEC handles cryptocurrency regulation. Overall, positive market sentiment and increased demand make the prospects for an XRP ETF promising.

WisdomTree enters ETF space

WisdomTree has officially filed an S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) to launch a spot XRP exchange-traded fund (ETF). The filing was filed on December 2, 2024, making WisdomTree the fourth company to seek approval for such a product, joining Bitwise, 21Shares, and Canary Capital.

Technical analysis: retracements and support levels

XRPUSD has now corrected slightly after a sharp rise of nearly 100% last week. It reached a high of $2.50 and is currently trading around $2.23. A daily close below $1.60 will indicate further slight bearishness. However, the pair is still trading above the short-term moving averages (34-day and 55-day) and the long-term moving average (200-day) on the 4-hour chart, showing some stability.

Resistance and Support Insights

XRP’s immediate resistance level is around $3; a break above this level could push the price towards $3. If it moves above $3.30, a major bullish trend could be in place that could lead to targets of $4 or $5. On the downside, the immediate support level is $2.50, with further targets at $2.20, $2.00, $1.60, $1.27, $1.00, $0.85, and $0.74.

Overbought indicators suggest caution

Current market indicators show that the daily RSI is at 94.89 and the weekly RSI is at 90.58, indicating overbought conditions and suggesting a possible minor sell-off to $2. Market indicators such as the Directional Movement Index and CCI (50) are bullish, but caution is warranted as the market is volatile due to overbought signals and recent long-term liquidation.

Trading strategy: Buy on dips

Considering the current market conditions, buying on dips around $2 could be a good strategy with a stop loss set at $1.60 and a target profit of $3.30. This approach allows traders to take advantage of a potential uptrend while effectively managing risk.