XRP’s Price Falls Significantly Amid Bitcoin’s Surge
XRP experienced a 13% drop in value on December 5, trading at $2.30, while Bitcoin (BTC) reached a new all-time high of $103,000. This marked a sharp correction from XRP’s multi-year high of $2.90 on December 3, resulting in a 25% loss of value in just two days. XRP’s market capitalization also fell by 8%, dropping to $133 billion and losing its position as the third-largest cryptocurrency to Tether (USDt). This abrupt decline has sparked concern among XRP investors, casting uncertainty on its future performance.
XRP’s Outperformance of Bitcoin Reverses
Between November 1 and December 3, XRP had dramatically outperformed Bitcoin, rallying 354%, compared to BTC’s 45.5% rise. However, this trend reversed as XRP’s BTC ratio fell to 0.00002334 by December 5, erasing its early December gains. The reversal occurred alongside Bitcoin’s historic $100,000 breakthrough, with investor attention shifting toward BTC, leading to a decline in XRP’s relative strength.
Liquidations and Open Interest Drop Add to Selling Pressure
The price correction was further exacerbated by the liquidation of $12.8 million in long XRP positions, which added substantial selling pressure. XRP futures’ open interest (OI) also dropped to $4.3 billion, though it remains significantly higher than November’s $722 million. This decrease in open interest signals that traders are becoming more cautious amid increasing volatility.
Technical Indicators Suggest Potential Upside for XRP
Despite the recent price decline, technical analysis indicates that XRP could still have upside potential. A bull flag pattern has formed 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 $4.83, which would represent a new all-time high for the cryptocurrency.
Support Levels to Keep an Eye On
XRP’s relative strength index (RSI) has dropped from 82 to 52, signaling a weakening in momentum. Failure to hold above the $2.37 level may lead to a retest of support levels at $2.05 or even $1.68. These levels will be crucial in determining whether XRP can regain its footing or if the downward trend will continue. Despite the short-term challenges, XRP’s long-term performance will largely depend on the broader market environment, particularly Bitcoin’s continued performance and potential regulatory factors.
