The recent surge of XRP above $3, primarily driven by large investors, has proven to be rewarding for patient individuals. Despite the substantial 53% growth year-to-date, investors are faced with a challenging decision – Should they secure their profits now or continue to hold in anticipation of even more significant gains?
The ongoing dilemma amidst a bullish market
Within the realm of high-cap cryptocurrencies, XRP’s remarkable 40% increase in monthly value has captured attention, especially with a substantial portion of those gains achieved at the beginning of this year. While this surge indicates a robust market rally, it also hints at a rapid escalation in price – a situation that might be viewed as unsustainable. The Relative Strength Index (RSI) supports this notion, having transitioned swiftly from a neutral position to an overbought status within just three days.
During such market conditions, it is almost inevitable that profit-taking activities will occur.
Following XRP’s remarkable 53% upturn in less than three weeks, it is no surprise that traders are capitalizing on their investments. Evidently, over the past two days alone, the influx of XRP into Binance has surged to almost 350 million – a staggering increase of 1567%.
Yet, an intriguing development lies in the actions of major investors – Despite the profit-taking activities, these large holders are retaining their positions. With an accumulation of approximately $4 billion post the recent surge, the much-expected massive sell-off has not transpired. Clearly, these significant investors are not pursuing short-term gains but are engaged in strategic, long-term investment approaches.
If this pattern persists, their strategy might pave the way for a substantial drive towards the $4 mark, emphasizing that holding onto XRP could be a prudent choice for those with long-term investment goals.
XRP amidst an economic imbalance
Following its surge beyond $3 with a notable 17% leap, peaking at $3.50 – only 11% away from its peak price of seven years ago – XRP witnessed an 8% decline at present. This downturn coincided with a shift in market dynamics, as the supply surpassed demand, leading to an economic imbalance.
Currently, a selling sentiment predominates in the perpetuals market, as evidenced by the taker buy/sell ratio, providing shorts with a distinct advantage. The consequence? Long liquidations amounting to $8.44 million.
The Futures market for XRP is evidently becoming more precarious for investors. Surprisingly, despite the market challenges, the Open Interest (OI) has only slightly decreased by 0.70%. This indicates that additional long positions could face pressure in the coming days.
For now, heightened volatility is anticipated in the short term as attention shifts to Bitcoin amidst the surge caused by recent events. As capital flows from XRP towards BTC, the XRP/BTC pairing also displays negative trends, indicating a shift in market behavior.
Unless major investors resume accumulation activities, a trend towards further profit-taking and potential closures of long XRP positions may be witnessed. Therefore, vigilance is necessary in the realm of derivatives trading.
Nevertheless, in the traditional spot market, the absence of intense selling by larger investors signifies a robust belief in the cryptocurrency.
If Bitcoin reaches its peak and profit-taking subsides, a surge towards $4 for XRP could potentially materialize, making holding XRP a prudent long-term strategy.