XRP price warning signs appear after 300% gain in two months

The price of XRP has risen more than 300% in the past two months and was trading at $2.10 on December 27. Still, warning signs suggest that XRP/USD could erase at least 25% of those gains in the short term.

XRP is nearing a downward triangle breakout

XRP's recent losses came as the price traded in a descending triangle pattern, which is bearish indicating further declines.

This pattern is defined by a series of low highs forming a triangular descending trend line, with the $2.10 level serving as horizontal support.

A critical break below the $2.10 support level could open the door to a deeper correction. The potential downside target for this breakdown is calculated by subtracting the height of the triangle from the breakdown point according to the rules of technical analysis.

RELATED: XRP Price Needs to Recover $2.30 to Absorb Buy Wall – Analyst

In other words, the price of XRP could drop to $1.64 by January 2025, a 25% drop from current price levels.

XRP whales sell the rip

Onchain data supports bear watching metrics by tracking whale addresses that show distribution sensitivity.

Specifically, the supply of XRP held by its wealthiest investors – those who own more than 1 million tokens – has dropped by 180 million since early December.

Meanwhile, the supply held by entities with 100,000 XRP balances has decreased by 170 million. The drops in supply for both sets of addresses are in line with XRP's 26% plus price drop from the local high of $2.90.

A large volume of whale sales could put downward pressure on prices because of the increased supply of tokens in circulation. Combined with the decline in prices, this suggests that selling activity has overwhelmed demand.

The supply of XRP on Binance is increasing

Additionally, XRP stock on Binance, the largest cryptocurrency exchange by volume, has been steadily increasing since mid-December, which is usually a bearish sign that precedes price corrections.

Rising exchange reserves reinforce the profit-taking narrative at domestic highs, contributing to XRP's continued bearish momentum.

Unless this trend reverses, XRP's price may face 25% downside risks as exchange offerings continue to grow and large holders continue to sell rips.

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.