XRP’s Price Correction and Market Cap Decline
XRP saw a steep 13% decline within 24 hours, trading at $2.30 on December 5, as Bitcoin (BTC) hit a new all-time high of $103,000. This drop represents a correction from XRP’s multi-year high of $2.90 on December 3, resulting in a 25% loss in value in just two days. XRP’s market capitalization also dropped by 8%, falling to $133 billion, causing the cryptocurrency to lose its position as the third-largest digital asset to Tether (USDt). This sharp correction has raised questions about XRP’s future performance.
XRP’s Outperformance of Bitcoin Reversed
XRP had outperformed Bitcoin between November 1 and December 3, rallying 354% compared to BTC’s 45.5% rise. During this period, XRP reached a 3.5-year high against Bitcoin. However, this trend reversed as XRP’s BTC ratio fell to 0.00002334 on December 5, erasing its early December gains. The reversal coincided with Bitcoin’s surge above $100,000, as investors’ focus shifted toward BTC, leading to a decline in XRP’s relative strength.
Liquidation and Selling Pressure Intensify Decline
The price drop was further fueled by the liquidation of $12.8 million in long XRP positions, adding significant selling pressure to the market. XRP futures’ open interest (OI) also decreased to $4.3 billion, though it remains a significant increase from November’s $722 million. This reduction in open interest reflects a shift in trader sentiment, as many are now more cautious amid the market’s volatile behavior.
Technical Indicators Show Potential for Recovery
Despite the recent price correction, technical indicators hint at potential upside for XRP. A bull flag pattern has emerged 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 new highs, potentially reaching $4.83. This technical setup provides a glimmer of hope for a price recovery, though caution is warranted due to the broader market conditions.
Key Support Levels to Monitor
XRP’s relative strength index (RSI) has fallen from 82 to 52, signaling a loss of momentum. If XRP fails to hold above the $2.37 level, it could revisit lower support levels such as $2.05 or even $1.68. These support levels will be critical in determining whether XRP can recover or if the downward trend will continue. The cryptocurrency’s long-term trajectory remains tied to broader market movements, particularly Bitcoin’s continued dominance and potential regulatory impacts on the sector.
