As bullish activity cooled, profit-taking in XRP intensified in the second week of December.
Review the status of XRP's spot flow and derivatives section.
Just a week ago, Ripple's native currency XRP was enjoying strong bullish momentum. It even set a new high in eight months during the first week of December, continuing the momentum from November.
Subsequently, XRP rebounded from recent highs as traders took profits. For reference, XRP reached a peak of $2.90 on December 3. Since then, it has dropped to a weekly low (so far) of $1.90, representing a 20% pullback.
This pullback means we now have a rough understanding of the starting and ending points of the latest rebound. Drawing the Fibonacci retracement indicator from the bottom to the top range shows that the price could fall to the range of $1.41 to $1.69.
As of the time of writing, the trading price of this cryptocurrency is $2.31. This occurred after an unexpected pullback during Tuesday's trading session. This suggests that investors expect more room for upward movement, leading to a resurgence in demand.
As market sentiment shifts from greed to fear, ongoing selling pressure may pave the way for further declines in XRP. Evaluating demand and supply forces helps clarify the demand levels for the cryptocurrency.
The spot flow of XRP indicates that the highest inflow of the cryptocurrency occurred in early December. On December 1, the inflow peaked at $177.33 million, and the latest inflow on December 10 was $11.35 million.
Spot outflows have also seen a recovery over the past 10 days. As of December 4, XRP outflows peaked at $155.79 million. The total outflows over the past 10 days exceeded inflows, reflecting a decline in funds during the same period.
What is the situation in the derivatives sector? According to Coinglass data, XRP experienced a spike in negative funding rates on December 11. This indicates a surge in short sellers as bearish expectations rise.
The negative funding rate appeared after a few consecutive days of declining positive funding rates, indicating that previous strong demand is cooling down.
Read Ripple [XRP] Price Prediction 2024-2025
These observations and the escalating spot flow suggest that the likelihood of XRP continuing to decline is increasing.
However, traders should closely monitor potential changes, including demand-triggering events that could benefit XRP bulls. Extreme volatility is expected in this process, similar to the situation that occurred on Tuesday due to liquidation.
