Ripple’s XRP Price hits a 7-year high of $2.80 driven by network growth but signs of a potential pullback loom.
Ripple’s XRP reached $2.80, its highest price in seven years, after a 40% jump in just 24 hours. This rise has excited the crypto market. It was driven by recent political events and more investor interest. However, experts caution that the rally could face challenges in the coming weeks.
What Triggered XRP Price Hits: 7-Year High?
XRP’s recent surge is mainly due to the US election results where Donald Trump and other pro-crypto leaders won key positions. Trump’s victory has raised hopes for more crypto-friendly laws in Washington, boosting Ripple Labs and XRP.
Ripple Labs has been in a legal case with the SEC since 2020. If regulations become more crypto-friendly, it could bring clarity. This could help launch projects like an XRP-based exchange-traded fund (ETF). For instance, the asset management company WisdomTree has applied for an XRP ETF, increasing hopes for more interest from big investors.
Key Metrics Driving the XRP Rally
XRP’s recent price surge is backed by strong network growth. There has also been more trading activity.
Network Activity and Retail Interest
Sentiment reports that active XRP wallet addresses have grown to over 116,000, showing more activity from regular investors. Unlike previous price increases driven by big investors, smaller traders mainly lead this rally. This suggests a shift in market trends.
Trading Volume Spike
XRP’s trading volume increased by 93.29% in 24 hours. This pushed its market value to $155.69 billion. As a result, XRP became the third-largest cryptocurrency surpassing Solana, USDT, and Binance Coin.
Why Analysts Are Cautious About XRP Rally
Despite its stellar performance, the XRP rally is showing signs of slowing down. Here’s why:
Declining Whale Activity
Large investors or whales, have been less active in buying XRP during this rally. Their stablecoin holdings have dropped to 53.99% of the total supply. This shows they are being cautious. This decline in whale activity may cause the rally to lose momentum.
Overbought Market Conditions
Ripple’s XRP hit $2.80, its highest price in seven years, after a 40% jump in 24 hours. This rise has excited the crypto market. It was caused by recent political events and more investor interest. Also, XRP is trading much higher than its short- and long-term averages, making a price pullback more likely. However, at the time of posting XRP’s price dropped a little bit and is trading at $ 2.60 according to Coinmarketcap.
Bearish Technical Signals
The Moving Average Convergence Divergence (MACD) chart shows a bearish crossover, with the signal line crossing above the MACD line. This indicates that the strong buying pressure is weakening. The histogram, which tracks momentum, has turned negative, suggesting the price might fall in the short term.
Could XRP’s Price Fall?
If the XRP price drops analysts believe XRP could fall to key support levels, like $1.97, which was last seen in April 2021. This price could act as a cushion if the rally loses momentum.
The profit-to-loss ratio shows the balance of winning and losing trades. It recently dropped to 0.374. This means more investors are selling than buying during the rally. It suggests cautious market sentiment.
What’s Next for XRP?
For XRP to keep rising, it will need more support from big investors and clear regulations. The possibility of a spot XRP ETF could be a big boost if approved, bringing new money and long-term interest from institutional investors.
Retail investors have driven much of the current rally, but their influence might not be enough to maintain momentum without backing from larger players. Analysts recommend keeping an eye on whale activity, regulatory developments, and technical indicators for clues about XRP’s future.
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XRP reaching $2.80 is a major milestone, showing growing confidence in the crypto market. However, the rally may face challenges like overbought conditions, cautious big investors, and signs that the price could drop. While XRP’s long-term outlook looks positive, especially with clearer regulations and a possible ETF, traders should expect short-term price changes.
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