#XRP soared past the $2.80 mark on Dec. 2, hitting a near six-year high of $2.90 amid anticipation of a favorable regulatory environment for cryptocurrencies under Donald Trump’s administration and the potential resolution of Ripple’s long-standing legal battle with the US Securities and Exchange Commission (SEC).
XRP price has, however, pulled back significantly since, leading to questions about whether $2.90 was the top, at least for now. The price of the remittance token is down 5% over the last 24 hours to trade at $2.45.
Let’s look closer at the factors driving XRP price down today.
Profit-taking slows XRP’s momentum
XRP is up more than 340% over the last 30 days, putting many tokenholders in profit, according to onchain data from Santiment. This has exerted high selling pressure in the market, pointing to a continued correction over the next few days.
The Network Realized Profit/Loss (NPL) indicator shown in the chart below suggests that holders booked profits following XRP’s run to $2.90. The NPL indicator spiked between Dec. 1 and Dec. 3, indicating that many holders sold their tokens at significant profit levels.
A similar spike was witnessed on May 1, 2021, after a month-long rally, which preceded a 35% correction over the two weeks that followed. XRP could see a similar drop over the next few weeks if history repeats itself.
The drawdown in XRP price also comes after the Dec. 4 announcement by Ripple that it was postponing the launch of its stablecoin, $RLUSD, citing delayed regulatory approval from the New York Department of Financial Services.
This announcement was a setback for investors who had pinned hopes on the stablecoin’s launch to accelerate the growth of XRP price. Touted as the cornerstone of Ripple’s On-Demand Liquidity (ODL) platform, $RLUSD is expected to play an important part in cross-border payment operations alongside XRP.
XRP price correction follows overbought conditions
The relative strength index (RSI) shows that XRP was massively overbought on multiple timeframes following its run to $2.90. Currently, the RSI is 84 on the weekly chart, sloping downward to suggest a weakening bullish momentum.
The $2.60 level continues to hold as resistance, and if bulls cannot flip it into support, XRP could extend the decline to retest the important level of $2.20.
Lower than that, the price may drop to collect the demand side liquidity before finding support between the $1.60 and $1.40 range.
These support areas, however, could provide perfect opportunities for traders to buy more at a discount, according to Market analyst EGRAG.
EGRAG says that the current market correction offers attractive opportunities for XRP investors. He points to $2.0 as a significant buying level, with the $1.60 to $1.70 range identified as another potential accumulation zone, particularly if XRP/USD experiences a price correction due to a rounding top pattern.
“At the $2.00 mark – Go heavy! At the $1.60–$1.70 zone – If we get a Rounding Top pullback, this could be a golden entry.”
A successful breakout from the rounding top formation could push XRP beyond the $3.50 to $3.80 range, setting the stage for a rally targeting $6 to $8 in the short term, according to EGRAG.
