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XRP dips: Unraveling the factors behind the decline

XRP dips: Unraveling the factors behind the decline

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TL;DR

  • XRP has experienced its worst weekly performance since August 2023, with a significant 9.5% drop, underperforming the broader crypto market.
  • The decline was influenced by a debunked rumor about a BlackRock XRP ETF and subsequent market liquidations, alongside whale distribution changes.
  • Technical analysis indicates XRP could face further declines or potential recovery, depending on its ability to overcome key resistance levels.

XRP, the prominent cryptocurrency, is experiencing a noticeable downturn, marking its most severe weekly performance since August 2023.

Currently trading around $0.60, XRP’s price has plummeted by nearly 9.5% week-to-date, including a 7.5% drop in the past 24 hours alone.

This decline is not occurring in isolation but is part of a broader trend affecting many top-ranking cryptocurrencies. However, XRP’s performance is notably lackluster compared to the broader crypto market, which saw a relatively milder dip of 2.5% this week.

This article delves into the key events and market dynamics that have contributed to XRP’s recent price trajectory.

The Impact of BlackRock ETF Rumor and Its Aftermath

A significant factor in XRP’s recent price volatility was a rumor about BlackRock, the world’s largest asset manager, planning to launch an exchange-traded product (ETF) centered around XRP.

On November 13, this speculation drove XRP’s price up by 12% to approximately $0.75. However, the rumor was later debunked by Bloomberg’s ETF analyst Eric Balchunas, resulting in a swift retraction to XRP’s initial value on the day.

This pump-and-dump scenario caused considerable liquidations in the derivatives market, predominantly affecting long position holders.

Between November 13 and 14, long liquidations in the derivatives market amounted to $17.5 million, compared to only $2.87 million in short positions, as reported by Coinglass.

The aftermath of the unfounded BlackRock ETF rumor played a significant role in XRP’s downward price movement for the remainder of the week.

This was evident again on November 17, when XRP’s price fell over 7.5% in 24 hours, with long liquidations amounting to approximately $5 million against $300,000 in short liquidations.

Technical Analysis and Whale Movements

Another contributing factor to XRP’s decline is the modest decrease in holdings of XRP’s wealthiest addresses.

Post the BlackRock ETF rumor, addresses holding between 100,000 and 100 million XRP saw a slight drop in their supply, while the cohort holding 100 million to 1 billion XRP experienced a marginal increase of 0.11%.

The largest XRP holders, with balances over 1 billion, remained relatively stable throughout the week. From a technical standpoint, XRP’s price correction aligns with its historical resistance trendline near $0.75.

Additionally, an ‘overbought’ condition indicated by XRP’s daily relative strength index (RSI) starting November 6, which reached its highest level since July 2023, typically signals an impending sell-off.

Currently, XRP faces the possibility of a further decline towards the lower trendline of its ascending channel, near $0.50, representing an 18.5% decrease from current levels.

This downside target coincides with XRP’s 50-week and 200-week exponential moving averages (EMAs), which have historically acted as support.

In contrast, a decisive breakout above the $0.75 resistance could propel XRP towards $1.13 in 2023 or early 2024, marking an over 80% increase from its current price. This optimistic scenario aligns with XRP’s 0.382 Fibonacci line.

While XRP’s recent price dip may appear as a typical correction within a bull market, its underperformance relative to the broader crypto market raises critical questions about its immediate future.

The combination of market rumors, whale distributions, and technical factors has created a challenging environment for XRP.

As the cryptocurrency market continues to evolve rapidly, the trajectory of XRP will be closely monitored by investors and market analysts, offering insights into the complex dynamics of digital asset trading.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Jai Hamid

Jai Hamid is a passionate writer with a keen interest in blockchain technology, the global economy, and literature. She dedicates most of her time to exploring the transformative potential of crypto and the dynamics of worldwide economic trends.

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