XRP Suffers 13% Decline, Market Cap Slips
XRP experienced a significant 13% drop within 24 hours, reaching $2.30 on December 5, while Bitcoin (BTC) surged to an all-time high of $103,000. This marks a sharp correction from XRP’s multi-year high of $2.90 on December 3, with the cryptocurrency losing 25% of its value in just two days. XRP’s market capitalization also fell by 8%, dropping to $133 billion, and it lost its position as the third-largest cryptocurrency to Tether (USDt). This rapid decline has raised questions about XRP’s future performance and its place in the market.
XRP’s Outperformance of Bitcoin Reversed
From November 1 to December 3, XRP had 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 timing of this reversal coincided with Bitcoin’s historic $100,000 breakthrough, which shifted investor focus away from XRP and led to a decrease in its relative strength.
Liquidation Pressures and Open Interest Drop
The price decline was exacerbated by the liquidation of $12.8 million in long XRP positions, adding to the selling pressure. XRP futures’ open interest (OI) also dropped to $4.3 billion, though it remains significantly higher than November’s $722 million. The decrease in OI suggests that traders are becoming more cautious and reducing exposure to XRP amid the broader market uncertainty.
Technical Signals Point to Potential Recovery
Despite the recent sell-off, technical analysis suggests that XRP could still have upside potential. A bull flag pattern has formed on the four-hour chart, indicating that the cryptocurrency may continue its prior uptrend. If XRP breaks above the flag’s upper trendline at $2.37, it could target $4.83, potentially setting a new all-time high. This bullish technical setup offers hope for a potential recovery, although it will be contingent on broader market conditions.
Support Levels to Watch for XRP
XRP’s relative strength index (RSI) has dropped from 82 to 52, signaling weakened momentum. If XRP fails to stay above the $2.37 level, it could retest lower support levels such as $2.05 or even $1.68. These critical levels will determine whether XRP can regain its momentum or face further declines. Its long-term outlook remains tied to Bitcoin’s performance and the overall market sentiment.
