XRP’s Price Rally May Be Short-Lived

In the past two months, XRP’s price has rallied by over 300%, reaching a high of $2.10 on December 27. However, warning signs suggest that this rally may be short-lived and could erase at least 25% of its gains in the short term.

XRP/USD Daily Price Chart

The XRP/USD daily price chart shows a descending triangle pattern forming, which is a bearish structure typically signaling further declines. The triangle’s trendline is formed by a series of lower highs, while the $2.10 level acts as horizontal support.

**Descending Triangle Pattern**

*   Series of lower highs forming the triangle's descending trendline
*   Horizontal support at $2.10

A decisive breakdown below the $2.10 support level could open the door to a deeper correction. According to technical analysis, the potential downside target for this breakdown is calculated by subtracting the triangle’s height from the breakdown point.

**Potential Downside Target**

*   Breakdown point: $2.10
*   Triangle's height: $0.90 (calculated using the rule of technical analysis)
*   Potential downside target: $1.20 ($2.10 - $0.90)

This potential downside target is approximately 25% below the current price levels.

XRP Whales Sell the Rip

On-chain data further supports a bearish outlook, with metrics tracking whale addresses revealing distribution sentiment. Notably, the XRP supply held by its richest investors – those with a balance of over 1 million tokens – has declined by 180 million since December’s beginning.

**XRP Supply in Addresses with Over 1M Balance**

*   Initial supply: 2.5 billion
*   Current supply: 2.32 billion (down 180 million)

Similarly, the supply held by entities with a 100,000 XRP balance has dropped by 170 million. The drops in the supply of both address cohorts align with XRP’s 26%-plus price decline from its local top of $2.90.

**XRP Supply in Addresses with Over 100,000 Balance**

*   Initial supply: 3.5 billion
*   Current supply: 3.33 billion (down 170 million)

Large-scale whale selling can create downward pressure on prices due to the increased token supply in circulation. Combined with the price decline, this suggests that selling activity has overwhelmed demand.

XRP Supply on Binance is Rising

Additionally, XRP reserves on Binance, the largest cryptocurrency exchange by volume, have been steadily increasing since mid-December. This typically precedes price corrections and reinforces the narrative of profit-taking at local highs, contributing to XRP’s ongoing bearish momentum.

**XRP Ledger Binance Exchange Reserves**

*   Initial reserve: 2.5 billion
*   Current reserve: 3.1 billion (up 600 million)

Unless this trend reverses, XRP price could face 25% downside risks as supply on exchanges grows and large holders continue to sell the rips.

Conclusion

XRP’s price rally may be short-lived due to warning signs indicating a potential 25% downside risk. The descending triangle pattern and whale selling activity suggest that selling pressure is outweighing demand, leading to a possible correction. Additionally, the rise in exchange reserves on Binance reinforces this narrative of profit-taking at local highs.

Disclaimer

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.