As a seasoned analyst with over two decades of experience in financial markets and a keen interest in cryptocurrencies, I find myself both captivated and cautious by the recent surge in Ripple (XRP) prices. The rapid rise to $2.50, propelled by the election of Donald Trump, has indeed been impressive, overtaking major coins like Solana, BNB, and Dogecoin. However, my years of market analysis have taught me that such parabolic moves often signal potential pitfalls.
In November, the price of Ripple experienced a dramatic upward surge, placing it among the top-performing digital currencies.
Ripple’s price soared to reach $2.50, marking a massive 400% increase from its lowest point in the past month. This dramatic rise propelled its market value beyond $130 billion, thereby outpacing well-known cryptocurrencies such as Solana, Binance Coin, and Dogecoin.
The main factor driving XRP’s increase was Donald Trump’s election win, which is anticipated to lead to more supportive cryptocurrency regulations. This change could be crucial because Ripple Labs has been engaged in a legal dispute with the Securities and Exchange Commission since 2020.
The election has opened up the potential for an exchange-traded fund (ETF) involving XRP to be established by 2025. Just recently, asset manager WisdomTree – currently managing around $111 billion – submitted an application for a direct Ripple ETF.
It’s been proposed by crypto experts that the surge in XRP’s price was primarily fueled by significant transactions by large-scale investors (whales), which in turn sparked a sense of apprehension about missing out on potential gains among individual investors (retail).
In a recent post on the platform X, Ki Young Ju, CEO of CryptoQuant, pointed out that whale activity on Coinbase significantly influenced the situation, as exchange premiums increased to between 3% and 13%. However, Upbit exchange, which has a large user base for XRP trading, did not show any such premium increase.
It appears that large investors on Coinbase are fueling the recent increase in the price of XRP. Over the past month, the price difference between Coinbase and other exchanges at minute levels has varied from 3% to 13%. However, Upbit, a Korean exchange with more XRP traders than Binance, has not yet shown any significant premium during this timeframe.
— Ki Young Ju (@ki_young_ju) December 2, 2024
In simple terms, according to Santiment – a renowned data analysis company – there has been an increase of about 671 million XRP coins over a three-week period in wallets that hold between 1 million and 10 million XRP. This is a significant rise as it’s the first such increment seen in these wallets in eight years. The surge appears to be fueled by a fear of missing out, or FOMO.
🚀 The price of XRP has reached an impressive $2.49 market value for the first time since January 8, 2018, marking a significant increase over six years (almost seven years). This surge occurred as wallets containing between 1 million and 10 million XRP have amassed a total of 679.1 million tokens, currently worth approximately $1.66 billion, within just three weeks. Additionally, the number of non-empty XRP wallets has…
— Santiment (@santimentfeed) December 2, 2024
XRP price could suffer a mean reversion
In simple terms, it’s possible that Ripple’s price might retreat a bit in the near future. This could happen due to mean reversion, which is a trend where an asset tends to move back towards its typical average price. Currently, Ripple is trading noticeably higher than both its short-term and long-term moving averages, suggesting this potential return to the norm might occur.
Moreover, it seems that XRP’s Relative Strength Index (RSI) and Stochastic Oscillator suggest the market is overbought, which could point towards a potential decrease in strength. Additionally, XRP might be experiencing the markup phase in the Wyckoff Method, a time when demand exceeds supply significantly.
After this stage usually comes the phase of distribution, which usually results in a decrease in price. It’s possible that Ripple’s value may fall back to reevaluate its support at $1.9697, a significant level not seen since April 2021.
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2024-12-02 17:27