XRP Price Hits 43-Month High, But Is The Rally Over Now?
XRP (XRP) rose 26.50% in the last 24 hours to reach $1.95 on November 30, the highest level since April 2021. The rally is mainly due to rumors that the New York Department of Financial Services (NYDFS) will approve Ripple's RLUSD stablecoin in December.
However, at least three XRP indicators point to bullish weakness in the coming days, which could lead to a 20% correction from current levels.
The price of XRP hit the resistance of the ascending channel
The first signs of the upcoming XRP price correction come from the current ascending channel.
On November 30, XRP reached the resistance level of the mentioned ascending channel, which raises the possibility of a correction in the near future. It is similar to previous corrections of the cryptocurrency after reaching the same resistance level as shown below.
XRP/USD four hour price chart. Source: TradingView
Additionally, XRP's Relative Strength Index (RSI) on the 4-hour chart has entered overbought territory above 80, indicating buyer fatigue. Historically, such RSI levels have coincided with price declines.
A bearish move could test support levels at $1.75, aligned with the channel's lower trendline, or near the 50-EMA at $1.48, a 20% drop from current price levels.
XRP whales are sold at a high level
Well addresses holding at least 100,000 XRP reduced their balances as the token approached recent local highs.
Onchain data from Masari shows that the supply held by these large wallets peaked at 90.73 billion XRP on November 24th before slipping to 30 million XRP, with some whales selling at these multi-year highs.
Addresses with more than 100,000 XRP. Source: Masari
The move coincides with the price of XRP nearing the resistance of the ascending channel, currently at $1.90, which will raise the low of the 20% price drop in December.
Overused XRP risks long liquidity
The XRP derivatives market has increased 37% open interest (OI) in the last 24 hours, hitting a record high of $3.19 billion, indicating high speculative activity in the market.
JA Maartun, an analyst at the onchain data platform CryptoQuant, said that the XRP OI increase is similar to the one before the 17% drop between November 23 and 26, noting that the “leverage-driven pump” of the cryptocurrency may cause long liquidation.
XRP price and OI 24-hour data. Source: CryptoQuant
Leveraged positions have liquid values, which are price levels at which the trader's holdings are insufficient to cover losses. At this time, the exchange immediately closes the position, removing the trader's assets.
Related: Is XRP Price About to Crash Again?
If XRP prices fall quickly, many overleveraged traders may hit their long liquidity levels at once. That forces the trader to sell the bond to the market, which accelerates the decline in prices.
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.
