On November 30, XRP recorded an impressive gain of 26.5%, pushing its price to $1.95—its highest level since April 2021. This boost has largely been fueled by speculation about the possible approval of Ripple’s RLUSD stablecoin by the New York Department of Financial Services (NYDFS), expected in December.
The Ascending Channel’s Resistance Points to a Possible Pullback
However, despite this surge, various signals hint at a potential downturn for XRP in the near term, with forecasts suggesting a possible decline of about 20% from its current price. The first signs of a potential correction can be observed in XRP’s movement within an ascending channel. As of November 30, XRP touched the upper limit of this channel, raising alarms about an impending price correction. This scenario echoes previous market behavior when XRP encountered similar resistance levels.
Additionally, an analysis of XRP’s 4-hour chart reveals that the relative strength index (RSI) has entered overbought territory, surpassing 80. This upward momentum may indicate that buying pressure is beginning to wane. Historically, such high RSI levels often precede a price decline.
If a drop occurs, XRP may find support around $1.75, aligning with the lower trendline of the channel. There’s also a chance it could fall to around $1.48, which would represent a roughly 20% decrease.
Whale Activity Declines as Prices Peak
According to data from on-chain analysis firm Messari, XRP holdings among accounts with at least 100,000 XRP have diminished as the price approaches recent highs. On November 24, these large wallets accounted for 90.73 billion XRP, but shortly after, that number dropped by 30 million XRP. This suggests that some whale investors have begun cashing out profits at these elevated prices.
This behavior aligns with XRP nearing the ascending channel’s resistance level—currently sitting at $1.90—further substantiating predictions of a potential 20% drop in December.
Increased Leverage in the XRP Market Raises Liquidation Concerns
Recent trends in the XRP derivatives market reveal a notable uptick, with open interest (OI) surging by 37% in just 24 hours, reaching an all-time high of $3.19 billion. This spike reflects a rise in speculative trading activity.
Analyst JA Maartun from CryptoQuant noted that this increase in OI resembles patterns that preceded significant price drops; one instance occurred with a 17% decline between November 23 and 26. This suggests that the current rally, driven by leverage, could lead to long liquidations if XRP’s price experiences a downward shift.
When traders use leverage, their margin positions are tied to specific liquidation prices. If XRP’s value plunges, many over-leveraged traders could hit those thresholds simultaneously, leading to the forced liquidation of their assets, which might further accelerate any drop in price.
Disclaimer:
This article is not intended as investment advice. Readers are reminded that all trading and investment activities involve risks, and thorough research is essential before making any financial decisions.Source: Cointelegraph
