2024-12-6 22:43 |
XRP has experienced significant volatility in recent days after a dramatic rally in November with its price retreating from recent highs.
However, while the XRP price correction is concerning, on-chain metrics suggest that bulls are still in control.
What’s behind the XRP pullback?XRP’s price has experienced a sharp 25% drop since reaching a multi-year high of $2.90 in early December 2024, trading at $2.30 as of December 5.
As XRP’s price dropped, its market capitalization fell by 8%, slipping below Tether USD to fourth place.
This correction comes after a remarkable rally, where XRP surged by over 400% following the election of President Donald Trump.
The appointment of Paul Atkins as the new SEC Chair also added fuel to this surge, as market sentiment grew bullish on the expectation of a crypto-friendly SEC leadership.
However, traders are currently taking the opportunity to lock in profits, contributing to the recent pullback.
This decline is part of a broader correction that has affected several altcoins, diverging from Bitcoin’s rise past $100,000.
Despite this, the drop could be a healthy market correction, as opposed to a full trend reversal, considering XRP’s strong performance earlier in the year.
On-chain metrics suggest continued bullish sentimentWhile the short-term price correction may cause concern, on-chain data presents a more optimistic picture for XRP.
One crucial metric supporting bullish sentiment is the stability of XRP’s funding rate.
According to Coinglass data, XRP’s funding rate has increased immensely to levels seen during XRP’s rally in February 2024 and March 2021.
Source: CoinglassThis surge suggests that the market is not overly bullish, reducing the risk of an overheated rally, while still providing room for further growth.
Moreover, XRP’s weighted sentiment remains low compared to previous rallies, indicating that retail traders are not the primary drivers of this latest surge.
This suggests that the current holders are more confident in the long-term prospects of the token, reducing the chances of a significant sell-off during market downturns.
Source: SantimentThese on-chain indicators suggest that the recent decline may be more of a temporary pullback rather than a sign of an impending trend reversal.
Technical indicators point toward a bullish reversalFrom a technical analysis perspective, XRP’s price is showing signs of potential upside despite the recent pullback.
A bull flag pattern has formed on the 4-hour chart, indicating that a bullish continuation may be in the cards once the price closes above the $2.37 resistance level.
If this pattern resolves positively, XRP’s price could see a surge towards $4.83, a new all-time high, marking a 60% increase from current levels.
Source: TradingViewHowever, the relative strength index (RSI) has dropped from overbought conditions, which may indicate further price consolidation or a temporary dip.
The RSI’s decline from 82 to 52 between December 3 and December 5 suggests a potential for a deeper pullback, but as long as XRP’s price holds above key support levels at $2.05 and $1.68, the bulls may quickly reclaim control.
Going by the technical analysis, the correction is possibly providing an opportunity for consolidation before another potential breakout, supported by strong market sentiment and solid technical foundations.
The post XRP on-chain metrics show bulls still in control despite the price correction appeared first on Invezz
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