XRP’s Significant Drop and Market Capitalization Loss
XRP experienced a sharp 13% drop within 24 hours, trading at $2.30 on December 5, even as Bitcoin (BTC) surged to an all-time high of $103,000. This significant drop marks a sharp correction from XRP’s multi-year high of $2.90 on December 3, resulting in a 25% loss of its value in just two days. As a result, XRP’s market capitalization slipped by 8%, falling to $133 billion and relinquishing its third-place position to Tether (USDt). This sudden reversal has raised concerns among XRP investors, despite the cryptocurrency’s remarkable performance earlier in the month.
XRP’s Outperformance Reversed: A Shift in Market Dynamics
From November 1 to December 3, XRP had been outperforming Bitcoin, with a massive rally of 354% compared to BTC’s 45.5% rise. This surge allowed XRP to reach a 3.5-year high against Bitcoin. However, this trend reversed as XRP’s BTC ratio dropped to 0.00002334 on December 5, erasing all of its early December gains. The decline occurred alongside Bitcoin’s historic $100,000 breakthrough, which further dampened investor sentiment on XRP.
Selling Pressure and Liquidation Contribute to Decline
The downturn in XRP’s price was exacerbated by the liquidation of $12.8 million in long XRP positions, which added significant selling pressure. XRP futures’ open interest (OI) also dropped to $4.3 billion, though it remains significantly higher than November’s $722 million. The decline in open interest suggests a shift in sentiment, with traders becoming more cautious amid the broader market volatility.
XRP’s Bull Flag Pattern Signals Potential Upside
Despite the recent downturn, technical indicators suggest that XRP could still have upside potential. A bull flag pattern has formed on the four-hour chart, signaling a possible continuation of the prior uptrend. If XRP breaks above the flag’s upper trendline at $2.37, it could target $4.83, setting a new all-time high. This bullish signal provides hope for a recovery, although the path forward remains uncertain.
Possible Downside: Support Levels to Watch
On the downside, XRP’s relative strength index (RSI) has dropped from 82 to 52, indicating weakened momentum. Failure to hold above the $2.37 level may lead to a retest of key support levels, such as $2.05, or even deeper support at $1.68. If XRP fails to maintain these levels, the cryptocurrency could face further declines, raising concerns about its short-term outlook. However, its long-term trajectory will largely depend on broader market dynamics, including Bitcoin’s continued performance and potential regulatory developments.
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