When it comes to managing risks in the investment world, one common strategy is to redistribute assets. After the turbulent first quarter, diversification is becoming increasingly popular. XRP’s impressive weekly spike of nearly 10%, contrasting with Bitcoin’s 5% drop, exemplifies this shifting trend.
Reaching $3 Remains a Distant Goal for XRP
Casting our minds back to the fourth quarter, XRP surpassed two significant psychological milestones due to the impact of the Trump trade. As Bitcoin soared to $99,000 by the end of November, the XRP/BTC pair experienced a surge marked by extended green candlesticks, achieving daily gains exceeding 10%.
Currently, a similar pattern seems to be emerging. A noticeable green candlestick indicated a single-day leap of 10.24% on the XRP/BTC chart, accompanied by a bullish MACD signal. Given the aftermath of a recent market crash, investors are proceeding cautiously. In this scenario, moving funds from BTC to XRP could be a wise move.
Despite various positive indicators such as the RSI not showing overbought conditions, significant whale acquisitions of 26 million XRP tokens, and the XRP/BTC pair switching to a positive trend, breaching the $2.60 mark has proven challenging in the past for XRP, which is currently trading at $2.55. Surpassing $3 still remains a formidable hurdle.
Furthermore, with a potential “Trump pump” on the horizon, strategic investors might refocus on BTC in anticipation of higher yields. This shift in attention could delay XRP’s ascent to $3.
Exercise Caution Moving Forward
According to CryptoCrypto, the ongoing 10% surge in XRP’s value could be fueled more by speculation than by solid fundamentals.
For starters, Open Interest (OI) in the Futures market has reached a record high of $5.42 billion, significantly higher than the $4.29 billion recorded during XRP’s yearly peak of $2.80 in mid-Q4.
While this surge may seem optimistic, cautionary signs are visible. Exchange reserves have climbed to 2.97 billion, historically signaling a potential peak for XRP. Additionally, outflow data suggests a lack of retail investment inflow into the market.
Notably, the substantial accumulation by whales has escalated “long” positions to unprecedented levels, setting the stage for a possible short squeeze. As evidenced by the recent events, shorts worth $10.79 million were squeezed out within the last 24 hours.
However, with dwindling retail investments, the XRP/BTC pair may soon show a negative trend, indicating potential troubles ahead. While the 10% surge may seem attractive, it might not provide the anticipated buying opportunity.
Therefore, another market correction could be imminent before XRP approaches the $3 mark. The response of the market to the anticipated “Trump pump” will likely bring clarity. As of now, it is advisable to proceed cautiously.