XRP Price Correction and Market Capitalization Drop
On December 5, XRP saw a 13% drop in value, trading at $2.30, while Bitcoin (BTC) surged to a historic all-time high of $103,000. This decline marks a sharp correction from XRP’s multi-year high of $2.90 on December 3, resulting in a 25% loss of value in just two days. XRP’s market capitalization also decreased by 8%, falling to $133 billion, causing it to lose its third-place ranking to Tether (USDt). This sudden downturn has raised concerns about XRP’s future prospects.
XRP’s Outperformance Over Bitcoin Reversed
XRP had been outperforming Bitcoin between November 1 and December 3, rallying 354%, compared to Bitcoin’s 45.5% increase. This surge allowed XRP to reach a 3.5-year high against Bitcoin. However, the trend reversed as XRP’s BTC ratio fell to 0.00002334 on December 5, erasing the early December gains. The reversal coincided with Bitcoin’s leap above $100,000, as more attention shifted toward BTC, dampening sentiment surrounding XRP.
Liquidation of XRP Positions and Open Interest Decline
The decline was exacerbated by the liquidation of $12.8 million in long XRP positions, adding considerable selling pressure. XRP futures’ open interest (OI) also fell to $4.3 billion, though it remains a significant rise from November’s $722 million. This decrease in OI indicates that traders are becoming more cautious, reflecting the broader market uncertainty and volatility.
Bullish Technical Pattern Suggests Possible Recovery
Despite the downturn, XRP’s technical indicators suggest that it could still have room for recovery. A bull flag pattern has appeared on the four-hour chart, signaling a possible continuation of the previous uptrend. If XRP breaks above the flag’s upper trendline at $2.37, it could target $4.83, marking a new all-time high. This technical pattern provides hope for a potential price rebound, but the outcome will depend on broader market conditions.
Support Levels to Monitor for XRP
XRP’s relative strength index (RSI) dropped from 82 to 52, indicating that its momentum has weakened. If XRP fails to hold above the $2.37 level, it may face a retest of lower support levels, such as $2.05 or $1.68. The critical support levels will be pivotal in determining whether XRP can recover or if the downward trend will continue. XRP’s long-term trajectory will remain closely tied to broader market dynamics, including Bitcoin’s performance and regulatory developments in the crypto space.
