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Profit-Taking Pushes XRP Down 9%: Is $2.45 the Next Support?

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Profit-Taking Pushes XRP Down 9%: Is $2.45 the Next Support?

XRP, the third-largest cryptocurrency by market capitalization, has dropped 9% since reaching its all-time high of $3.41 on January 16. This decline, driven by increasing sell-offs, raises concerns about further downward momentum in the near future.

Profit-Taking Intensifies, Driving XRP’s Price Lower

Profit-taking activity has surged, putting significant pressure on XRP’s price. On-chain data reveals a persistent increase in selling. The Network Realized Profit/Loss (NPL) metric consistently shows positive values, indicating that investors are selling at a profit. These readings suggest a steady influx of supply into the market.

XRP NPL. Source| Santiment

When more holders sell for gains than for losses, market supply outpaces demand. This imbalance often triggers price declines. Over the past week, XRP has faced precisely this scenario, which has steadily eroded its value.

XRP Exchange Flow Balance. Source| Santiment

The Exchange Flow Balance metric further highlights the growing sell-offs. This metric, which tracks net token movement into and out of exchanges, has surged by 105% since January 17. Increased deposits to exchanges often signal traders preparing to sell their holdings. For XRP, this trend aligns with its ongoing price drop, emphasizing the bearish sentiment in the market.

The surge in exchange inflows suggests that traders are locking in profits after XRP’s impressive rally to $3.41. With supply increasing on exchanges, buyers face mounting pressure to absorb the selling activity.

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Will XRP Fall to $2.45?

Currently, XRP trades at $3.09. If the profit-taking trend continues, the price could drop to $2.45. This level represents a key support point where buyer interest might stabilize the market. However, if traders reduce sell-offs, XRP may reverse course and aim to reclaim its all-time high.

XRP Price Analysis. Source| TradingView

The path forward depends on whether profit-taking subsides or persists. A decline in selling activity could spark renewed demand, potentially pushing XRP back toward $3.41. Conversely, sustained selling could send the price tumbling further.

Balancing Risks and Opportunities

Profit-taking, while indicative of investor confidence, can harm market stability. Excessive selling often overwhelms demand, leading to prolonged downturns. However, it also reflects the ability of an asset to generate returns for investors. For XRP traders, monitoring key on-chain metrics like NPL and Exchange Flow Balance is essential to gauge market trends.

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XRP’s recent price movements highlight the delicate balance between profit-taking and market demand. With selling activity surging and exchange inflows increasing, the cryptocurrency faces critical challenges. Traders should remain vigilant as the market approaches the $2.45 support level. Whether XRP rebounds or continues its decline depends on how investors respond in the coming days.

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