The cryptocurrency market is currently under pressure, with a loss of more than 6% in its total market capitalization due to the recent DeepSeek controversy impacting the U.S. stock market.
Major players like Ripple [XRP] are facing significant losses, with millions wiped out and fear spreading rapidly. After breaking below the crucial $3 mark, where will XRP seek its next level of support?
Consider Buying during the Dip or Awaiting a Possible Bottom?
In the aftermath of Trump’s second term inauguration, Bitcoin [BTC] has witnessed a 9% decline, with bearish activity pushing BTC below $100K within a single day.
For the next 140 hours, BTC remained range-bound between $100K and $105K. Nevertheless, there are now signs of a clear market direction emerging.
The altcoin market mirrored this drop, yet Ripple experienced a more substantial impact. Within just one day, XRP plummeted by 11% and is currently down by 20% from its recent peak of $3.40, achieved three days prior to Trump’s return to office.
Interestingly, in both instances, XRP did not exhibit signs of excessive overvaluation. It was the overall market panic affecting the altcoin’s performance. Consequently, there was a significant 44.07% increase in long liquidations within a single day.
While a 20% drop from its highest point may appear to be an attractive entry opportunity, everyday investors have not yet entered the market in large numbers.
At present, XRP outflows from Binance have remained stagnant, reflecting a 98.96% decline from the New Year rally when 2.8 billion XRP units were withdrawn.
However, approximately $4 billion worth of XRP has been acquired by large holders since the U.S. election, suggesting that the recent surge above $3 was fueled by aggressive accumulation.
The critical question now is whether these prominent investors have completed their buying spree or if a phase of distribution is imminent.
XRP’s Stability Hinges on Major Players
Observing its daily chart, XRP has consistently rebounded strongly within the $2.30 – $2.40 range since December, with increased involvement from average investors, rendering this price level a significant support threshold.
However, a noteworthy event occurred when around 29.5 million XRP tokens were transferred to Coinbase, coinciding with the 11% decline in its value.
Considering that long-term Bitcoin holders have started cashing out following significant gains from BTC’s surge from $68K to $109K, it is plausible that XRP’s large holders may follow suit.
XRP has recorded an impressive 608% surge since the election, with these major investors now sitting on substantial profits.
If the prevailing market downturn persists, more long-time holders might opt to secure their gains, potentially leading XRP to drop as low as $2.