Investors often adjust their investment strategies to manage risks effectively. Considering the Q1 market volatility, diversification is poised to gain significant traction. The recent nearly 10% surge in XRP, contrasting Bitcoin’s 5% decline, reflects this shifting trend.
XRP Still Has a Long Journey to Reach $3
Recalling the events of Q4, XRP surpassed two key psychological barriers, spurred by the impact of the Trump administration. While Bitcoin soared to $99k by the end of November, the XRP/BTC pair experienced a surge, delivering daily gains exceeding 10% with notable green candlesticks.
It seems history may repeat itself, as evident by a substantial single-day 10.24% surge on the XRP/BTC chart. The MACD has turned bullish, indicating a potential uptrend. Amid the aftermath of a recent market crash, investors are treading cautiously. Given the current climate, transitioning capital from BTC to XRP appears as a strategic move.
Despite positive indicators – such as the RSI not hitting overbought territory, substantial whale acquisitions of 26 million XRP tokens, and the XRP/BTC pair showing green signals – surpassing the $2.60 mark remains a challenge. Surpassing $3 might still be considered a lofty goal.
With a possible “Trump pump” event on the horizon, savvy investors might refocus on BTC to capitalize on potential higher returns. Consequently, XRP’s journey to $3 could experience a delay.
Exercise Caution in Current Market Conditions
According to CryptoCrypto, the current 10% surge in XRP may be predominantly speculative rather than being driven by solid fundamentals.
Firstly, the Futures market’s Open Interest (OI) has surged to a record high of $5.42 billion – significantly surpassing the $4.29 billion figure observed during XRP’s yearly peak at $2.80 in mid-Q4.
While this surge appears positive, cautionary flags are emerging. The exchange reserves have reached 2.97 billion, historically an indication of a possible peak for XRP. Additionally, outflow data suggests a lack of retail capital entering the market.
When considering whale activity, the situation becomes clearer. Aggressive accumulation by whales has propelled “long” positions to new heights, setting the stage for a potential short squeeze. In the last 24 hours alone, $10.79 million in shorts were forced out.
However, with retail investments showing a decline, the XRP/BTC pair may soon shift to a negative trend, implying potential challenges ahead. Therefore, despite the allure of the 10% surge, it may not represent the anticipated market “dip.”
Thus, a further correction could be imminent before XRP even nears the $3 mark. The market’s response to the upcoming “Trump pump” event could offer clarity. Until then, approaching with caution is recommended.