Ripple’s XRP has experienced an impressive surge in late 2024, captivating investors and securing a prominent spot in the cryptocurrency market. On December 3, XRP achieved a market cap of $165.74 billion, trading at $2.90 per token.
This rally pushed XRP to become the third most valuable cryptocurrency by market capitalization, surpassing Solana (SOL) and Tether (USDT). Despite this momentum, cautionary signals suggest the potential for a significant price correction.
Signs of a Potential Correction
The soaring market cap reflects high demand amidst Ripple’s continued token unlocks and sales, raising concerns about circulating supply inflation. Technical indicators point to overbought conditions, with XRP’s daily relative strength index (RSI) exceeding 75 points since November 11 and peaking at a striking 95 during its market cap high. Similarly, the weekly RSI has reached 91.17, a level historically associated with sharp downturns.
Notably, the last time XRP’s weekly RSI reached such levels was in late 2020, resulting in an 80% price drop within weeks. Adding to the risk, the market exhibits signs of speculative excess, with a high funding rate imbalance heavily favoring long positions. Traders holding long positions must pay short-sellers an annualized funding rate of 66%, potentially setting the stage for a long squeeze and a subsequent price decline.
Final Thoughts
While technical indicators and market dynamics suggest a looming correction, XRP’s past performance has demonstrated its resilience in defying bearish predictions. Cryptocurrencies, including XRP, are inherently volatile and prone to unexpected price movements. Investors should approach the market with caution, recognizing the risks of leveraging during periods of heightened speculation.
XRP’s recent rally highlights its significant market appeal, but the warning signals from technical metrics and funding imbalances cannot be ignored. A measured approach and risk management are critical as traders navigate the unpredictable waters of cryptocurrency investments.
Anthony Pedro
Anthony Pedro is a seasoned crypto writer with a deep passion for blockchain technology and digital currencies. With over 4 years of experience in the cryptocurrency space, Anthony has become a trusted voice, offering insightful analysis and commentary on the latest trends, innovations, and market movements. When not writing, he is actively engaged in the crypto community, attending conferences, advising blockchain startups, and experimenting with new projects.