After rising above the multi-year high, the price of Ripple (XRP) was trading marginally lower yesterday with a 22% crash. According to on-chain data, buyers of XRP make money following a significant rally, which heightens selling pressure and portends a brief decline in the days ahead.
XRP On-chain Metrics Analysis
Between early November and early December, the price of ripple increased more than four times. Another potential danger for Ripple following such a significant rally is profit-seeking. Holders should book earnings at the top using the Sentiment's Network Discovered Profit or Loss (NPL) indicator.
On December 1, XRP's NPL metric increased, showing that holders typically profit when they sell their bags. Following a rally in the previous month, which resulted in a correction of more than 35% in the following two weeks, a similar peak was observed on May 1, 2021. In the short run, XRP might experience a similar decline if history repeats itself.
The long-to-short percentage for XRP is 0.85, the lowest ever recorded in a month. A ratio below one indicates that more traders expect the asset's price to decline; it indicates that the market is negative and that a decrease in the price of ripples may be imminent.
XRP Bulls Are Threaten By the SEC's Action
Because of the US SEC's legal action accusing Ripple of selling securities without a license, XRP was subject to regulatory ambiguity for years. However, the court's historic 2023 decision, which ruled that XRP did not constitute a security when offered to the general public, greatly eased the regulatory burden.
After ruling that offering $728.9 million worth of XRP coins to hedge resources and other sophisticated investors corresponded to offering unregistered investments.
Later, the court issued an injunction to prevent further securities law violations and demanded that Ripple shell out 125 million dollars in civil penalties. The company was relieved because the SEC had previously requested $900 million in civil fines and $1 billion in restitution and bias interest.
XRP Price Prediction Technical Analysis
In the daily chart of Ripple price, the broader market momentum is bullish, where the recent price peaked at the 2.90 level with a bullish impulsive momentum. However, a decent profit taking is seen at the top as the most recent daily candle showed a bearish exhaustion with a 22.72% daily crash.
In the broader context, the 200-day SMA and 50-day EMA are still below the current price, which signals a potential bullish continuation pressure. However, the wider gap with the dynamic line signals a potential downside correction as a mean reversion.
Based on this outlook, the price is likely to extend the downside pressure and fill the price inefficiency from the 1.7619 to 1.5432 zone.
On the other hand, the bullish trend is still intact, and any bullish rebound from the near-term support zone could resume the existing trend aiming for the 2.8000 level.
