On December 5, XRP took a hit, dropping 13% and settling at $2.30. This decline sharply contrasts with Bitcoin (BTC), which recently celebrated a milestone by surpassing the $100,000 mark, a significant achievement in the cryptocurrency landscape.
Market Dynamics Impacting XRP
The slide in XRP’s value began on December 3, after it reached a high of $2.90, leading to an overall drop of 25%. This downward trend has also impacted XRP’s market capitalization, which decreased by 8%, bringing it down to $133 billion. As a result, XRP slipped to the fourth position in the market rankings, falling behind Tether USD (USDt).
From the beginning of November to early December, XRP had been on a remarkable rise, skyrocketing by 354% between November 1 and December 5. During the same time frame, Bitcoin only managed a modest gain of 45.5%. Consequently, XRP enjoyed a surge against Bitcoin throughout November, peaking with an exchange rate of 0.00003012 on December 3. However, that ratio has now tumbled to 0.00002334, wiping out the recent gains amid shifting market sentiment.
Liquidations and Futures Open Interest
Notably, XRP’s decline aligns with Bitcoin’s impressive rally, which broke through the long-anticipated $100,000 barrier to reach an all-time high of about $104,000. Interestingly, on December 5 alone, liquidations of long positions in XRP exceeded $12.79 million, outpacing the $7 million in short position liquidations and adding further pressure on XRP’s price.
These long-position liquidations correspond with a notable dip in XRP’s futures open interest, which fell from $4.3 billion just a day before, although it’s still significantly higher than the $722 million recorded at the beginning of November. Additionally, there was an uptick in XRP’s funding rate, climbing from 0.0163% to 0.0553% in just one day. This shift could suggest that traders are rediscovering their optimism for altcoins like XRP.
Technical Analysis and Future Outlook
From a technical analysis perspective, XRP’s recent price movement has formed a bullish flag pattern on the four-hour chart. This pattern usually signals a continuation of upward momentum, created following a consolidation phase within a downward slope that follows a rapid price increase. If XRP successfully breaks above the upper trendline of the flag at $2.37, it may set its sights on a target as high as $4.83, potentially achieving a new all-time high in the process.
However, caution is warranted, as the relative strength index (RSI) for XRP has dropped from overbought levels of 82 to a more balanced 52 between December 3 and December 5. Should the RSI continue to decline, the chances of a more substantial price correction could rise. This means that if XRP falls below $2.37, attention may need to shift to the lower trendline of the flag around $2.05, which is supported by the 50-period simple moving average (SMA). If the situation turns unfavorable, XRP could test support levels closer to the 100 SMA around $1.68.
Source: Cointelegraph
