XRP Suffers Sharp Drop as Bitcoin Hits New Highs
XRP saw a significant decline of 13% on December 5, trading at $2.30, in contrast to Bitcoin’s (BTC) new record-breaking value of $103,000. This decline came after XRP reached a multi-year peak of $2.90 on December 3, marking a 25% drop over just two days. XRP’s market cap fell by 8%, and it was overtaken by Tether (USDt), which now holds the third spot in cryptocurrency rankings. This sudden drop has raised concerns about XRP’s future in the market.
XRP’s Bullish Momentum Reversal
Between November 1 and December 3, XRP had significantly outperformed Bitcoin, surging by 354% compared to Bitcoin’s 45.5% increase. However, as Bitcoin crossed the $100,000 mark, XRP’s BTC ratio dropped to 0.00002334 by December 5, reversing its earlier outperformance and causing a shift in investor focus to Bitcoin.
Liquidations and Open Interest Drop Weigh on XRP’s Price
The sharp decline was worsened by $12.8 million in long XRP positions being liquidated, putting additional selling pressure on the asset. XRP’s open interest (OI) also decreased to $4.3 billion, though still a massive increase from November’s $722 million. This drop in OI reflects cautious sentiment among traders amid mounting market uncertainty.
Technical Indicators Suggest Possible Recovery
Despite the sharp drop, XRP’s technical outlook remains somewhat optimistic. A bull flag pattern has emerged on the four-hour chart, suggesting that the asset could continue its upward trend if it breaks the upper trendline at $2.37. A potential target of $4.83 could set a new all-time high for XRP, contingent on broader market conditions.
Critical Support Levels to Watch
XRP’s RSI has fallen from 82 to 52, signaling weakening momentum. A failure to hold above $2.37 could see XRP testing support levels at $2.05 and $1.68. These support zones will be crucial in determining whether the cryptocurrency can recover or if the downtrend will persist.
