XRP, one of the top cryptocurrencies, has recently suffered a significant price drop, falling more than 20% from its three-year high. This sudden drop has raised concerns among investors and the cryptocurrency community, leading to a larger market correction. In this XRP Price Prediction article, we will analyze the reasons behind this sharp price drop, the factors affecting XRP price, and what it means for the future of the token.
How Has XRP Price Changed Lately?
XRP's current price is $1.084599, with a 24-hour trading volume of $8.98 billion. Its market capitalization is $61.75 billion, giving it a market dominance of 1.98%. Over the past 24 hours, XRP's price has decreased by 1.66%.
XRP reached an all-time high of $3.92 on January 4, 2018, while its lowest price was recorded at $0.002802 on July 7, 2014. Since its peak, XRP's lowest price was $0.113268 and its highest recovery since then was $1.97793. Currently, the market sentiment around XRP is bullish, with the Fear & Greed Index reflecting a score of 83, indicating extreme greed.
XRP's circulating supply is 56.93 billion tokens, out of a maximum total supply of 100 billion. XRP's annual supply inflation rate is 5.98%, meaning 3.21 billion new tokens were created over the past year.
Why Is XRP Price Dropping?
The drop in XRP prices may be partly due to large-scale withdrawals from major exchanges such as Upbit and Binance. Over the past week, nearly 250 million XRP tokens were withdrawn from Upbit, bringing the exchange’s reserves to a four-month low of 6.3 billion XRP. Binance has also seen a similar trend, with XRP reserves steadily decreasing after peaking on November 12.
These withdrawals, often seen as a sign of increased buying pressure, can often suggest an uptrend. However, when combined with other market factors, this lack of liquidity can amplify volatility, contributing to price swings.
The recent increase in XRP’s estimated leverage ratio (ELR) signals increased speculative activity in the derivatives market. The ELR reached 0.17, its highest level since January, reflecting increased confidence in the ongoing bull run.
While this optimism can fuel short-term price gains, it also increases the risk of a sharp correction as overleveraged positions are liquidated during market downturns. This pattern often plays a key role in exacerbating bearish conditions, as seen in XRP’s recent pullback.
Another factor contributing to the price drop was record-high futures open interest, which spiked to $1.98 billion on Sunday before falling to $1.84 billion on Wednesday. The high open interest, combined with bullish sentiment, suggests active speculation in the market.
Such scenarios often result in heightened price volatility, with any sudden change in market sentiment triggering corrections as traders exit their positions.
XRP Price Prediction: What Will XRP Price Do Next?
Despite the current decline, the overall XRP market activity reflects underlying bullish momentum. The decline in trading reserves and high open interest indicate strong investor interest, which could support a price recovery if the overall market stabilizes. However, the high ELR suggests caution, as excessive leverage could lead to a sudden and severe correction.
If FX reserves continue to decline and buying pressure persists, XRP could find support at lower levels, potentially setting the stage for a recovery. However, the sustainability of the recovery will depend on broader market conditions and whether speculative leverage is balanced in the derivatives market. Investors should monitor changes in ELR and open interest to assess the possibility of further correction or a return to bullishness.
