XRP bulls may face a ‘bloodbath’ if Bitcoin’s supremacy rises: analyst

XRP has fallen about 18% since hitting a yearly high on Dec. 3, but traders are still hoping for a strong rebound. Their optimism could be tested if Bitcoin's dominance continues, a crypto analyst said.

“The real risk for currently highly leveraged XRP bulls is a resurgence of Bitcoin dominance. A shift away from XRP to Bitcoin could lead to a bloodbath.”

Markets have developed a ‘thirst' for XRP long positions.

According to TradingView data, at the time of publication, Bitcoin (BTC) was up 55.30%, down 5% last week. Some traders estimate that Bitcoin's dominance could peak in the 60% to 70% range before capital begins to turn to altcoins.

“We've seen a lot of fast-talking retail buying over the past few weeks, and open demand is now on track to double the levels we've seen in 2021,” Handul said.

Hundel added that the market “seems to have developed a thirst for long-term XRP exposure.”

“I'm watching XRP go long when the price goes down,” he said.

XRP (XRP) was trading at $2.37 at the time of publication. Even a 7% pullback from the current price to $2.18 would wipe out $104.4 million in long positions.

“The market is starting to look like it might be approaching a happy state,” Hundal said.

For most of 2024, XRP traded in a narrow range between $0.48 and $0.73. It sparked a 431% rally after Donald Trump's US presidential victory on November 5. On December 3rd, XRP reached $2.85.

On December 5, XRP open interest (OI) – a measure that tracks the total number of unsettled Bitcoin derivative contracts such as options and futures – reached $3.44 billion, according to CoinGlass data.

Bitcoin Stabilization ‘Soothes Nerves'

In April 2021, the open interest of XRP was almost $1.44 billion, compared to the $2 billion recorded in the same price rally in April 2021.

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The XRP/BTC ratio — XRP's relative strength compared to Bitcoin — is 0.00002375, up 2.72% since December 5 and up 47.6% over the past 30 days, according to TradingView data.

If bitcoin stabilizes, Hundel said, “it will calm the nerves and the volume may pick up again.”

“Funding on Binance is not very hot, but on other exchanges, they are very hot. Anything over 50% on the one-year funding volume heat map is generally considered very exciting.”

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This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.