Ripple's XRP surged 7% on Friday as whales held on to their tokens despite heavy profit-taking among retail traders. This whale sentiment could push XRP to a new all-time high of $3.57.
XRP On-Network Data Points to Optimism Despite Record Profit Taking
After rising to a four-year high of $2.91 on Tuesday, the XRP price retraced back, falling approximately 17% over the next three days.
The decline was potentially caused by increased profit-taking, as evidenced by the indicator of realized profits and losses in the XRP network, which shows that investors have locked in profits of over $5.86 billion since December 1. Such profit-taking is typical for investors during bullish markets, especially when prices reach new highs.
Realized Profit and Loss of the XRP Network | Santiment
This is evidenced by the XRP Mean Coin Age metric, which shows that selling activity grew over the week across all coin age cohorts, especially among the 2-3 year cohorts. When this metric shows a decline, it indicates distribution among the corresponding coin age cohort.
Average Age of XRP Coin | Santiment
Despite the recent pullback from profit-taking, other data on XRP in the network indicates that optimistic sentiment still prevails in the market.
The Market Value to Realized Value (MVRV) ratio of XRP, which measures the average profit or loss of all holders, shows that investors are still holding over 388% profit.
Notably, much of the recent selling activity may have been linked to retailers, as whales showed little inclination to accumulate. This is evident in the chart below, which shows that investors holding between 1 and 10 million XRP increased their holdings by 260 million XRP tokens over the week.
XRP Supply Distribution (1M - 10M) and MVRV Ratio | Santiment
Additionally, Santiment data shows that whale activity—transactions over $1 million—reached a five-year high over the week.
Number of XRP Whales Transactions (> $1M) | Santiment
The 'Age Consumed' metric, which measures the movement of previously dormant/old coins multiplied by their quantity, remained low, and whale assets did not decrease.
This shows that most of the whale activity over the week was potentially skewed towards accumulation. When whales are still holding their tokens during a bullish market, it indicates that they believe prices have more room to grow.
XRP Age Consumed | Santiment
However, it is important to note that there are also many new XRP whales who bought the token after the U.S. presidential election. This cohort may start a panic sell-off if XRP drops around their break-even price.
Furthermore, the number of weekly active XRP addresses continues to grow, reaching a sixteen-month high of 495,000.
Meanwhile, Ripple Labs' Chief Technology Officer David Schwartz stated at The Emergence conference on Friday that he hopes the company will launch its stablecoin RLUSD by the end of the year. Members of the crypto community were expecting a launch on Wednesday, but Ripple dispelled rumors of any potential launch this week.
XRP needs to break the $2.92 level before starting a rally to a new all-time high.
XRP has recovered the Fibonacci (Fib) 23.6% retracement level after a brief drop below it over the week. If XRP can reclaim the $2.58 level, it may retest $2.92, where it saw a pullback.
Weekly Chart of XRP/USDT
Movement above this level may lead XRP to reach a maximum target profit of a multi-year rounded bottom, rising above the historical high of $3.4 and setting a new record at $3.57.
The Relative Strength Index (RSI) is in the overbought zone, indicating that prices are overheating and a correction is likely. The stochastic oscillator is in the overbought zone but is trending downwards, indicating a weakening bullish momentum.
Closing the weekly candle below the $1.96 level near the 50% Fibonacci retracement will invalidate the bullish thesis and send XRP searching for support near the 61.8% Fibonacci level.
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