XRP Price Soars to 43-Month High, But Is the Rally Over?

XRP technical analysis suggests that prices could fall by 20% in December, with over-leveraged positions likely to exacerbate downward pressure.

XRP (Ripple) surged 26.50% in the past 24 hours, reaching $1.95 on November 30, its highest level since April 2021. Its rise was mainly driven by rumors that the New York Department of Financial Services (NYDFS) will approve Ripple's RLUSD stablecoin in December.

However, at least three XRP indicators suggest that bullish sentiment will exhaust itself in the coming days, potentially leading to a 20% correction from current levels.

The first sign that XRP price is about to pull back comes from its current ascending channel.

On November 30, XRP reached the resistance level of the aforementioned ascending channel, raising the possibility of a near-term correction. This is similar to the cryptocurrency’s previous corrections after reaching the same resistance level, as shown in the chart below.

Additionally, the relative strength index (RSI) on the XRP 4-hour chart has entered overbought territory, exceeding 80, signaling potential buyer exhaustion. Historically, such RSI levels have coincided with price declines.

On the downside, the pair could test support near $1.75 (which is aligned with the channel's descending trendline) or move further towards the 50-EMA near $1.48, which would be around 20% below the current price.

As the coin approaches recent local highs, whale addresses holding at least 100,000 XRP have seen their balances decrease.

Onchain data from Messari shows that the supply held by these large wallets peaked at 90.73 billion XRP on Nov. 24 before sliding by 30 million XRP, suggesting that some whales are selling at these multi-year highs.

The move comes as XRP’s price approaches the resistance of its ascending channel (currently at $1.90), thus exacerbating the downtrend that saw prices drop 20% in December.

Open interest (OI) in the XRP derivatives market has increased by 37% over the past 24 hours to a record high of $3.19 billion, indicating increased speculation in the market.

JA Maartun, an analyst at on-chain data platform CryptoQuant, said the increase in XRP OI is similar to the situation that preceded the 17% drop from Nov. 23 to 26, noting that the cryptocurrency’s “leverage-driven pump” could lead to long liquidations.

Leveraged positions have a liquidation price, which is a specific price level at which the trader's collateral is insufficient to cover losses. At this point, the exchange automatically closes the position and liquidates the trader's assets.