Significant buying opportunity emerges for XRP as it sheds over $26 billion in a week's timeframe.
In a recent turn of events, the price of XRP, the fourth-largest cryptocurrency by market capitalization, has taken a significant hit, plunging below the $3 mark. This crash is mainly attributed to a combination of technical resistance, heavy whale and insider selling, profit-taking, and weakening on-chain support.
Last week, XRP failed to break through a critical $3.05 resistance level and reversed sharply after reaching around $3.17, falling over 8% in 24 hours. This failure was followed by a wave of selling, coinciding with the token slipping below $3, a level that has historically triggered 10% to 15% corrections.
Large XRP holders, often referred to as whales, and insiders have been offloading massive amounts of XRP. For instance, a $175 million XRP transfer by Ripple co-founder Chris Larsen added selling pressure and sparked fears among retail investors.
More than 90% of XRP holders were in profit during a recent surge above $3.60, triggering profit-taking and short-term selling. The TD Sequential indicator flashed a sell signal before the price started falling, often signaling a deeper correction ahead.
The MVRV ratio, a popular on-chain metric, also showed a "death cross," suggesting momentum has turned bearish and the market may be entering or continuing a downtrend. On-chain data shows weakening support below the $3 level, with stronger support only near $2.48, raising the risk of a steeper correction if selling persists.
However, there are signs of a potential recovery. XRP would need to reclaim and sustain above key resistance levels, such as $3.05, to indicate a reversal. A reduction in whale selling and signs of improved on-chain support metrics would also be positive indicators.
XRP's longer-term prospects hinge on increased financial institution adoption of Ripple's payment platform that utilizes XRP as an intermediary. However, adoption has been slow, and banks are not fully tethered to XRP usage in the ecosystem.
Additional immediate caution arises as XRP remains stagnant around $3, tightening liquidation levels which could trigger sharp volatility or further declines.
In summary, the crash in XRP's price is driven by both technical bearish signals and significant insider selling, while recovery signs would involve stabilized support, reduced selling pressure, and renewed institutional adoption momentum.
[1] Coindesk (2021) XRP Price Plunges Below $3 as Selling Pressure Intensifies. [online] Available at: https://www.coindesk.com/markets/2021/08/20/xrp-price-plunges-below-3-as-selling-pressure-intensifies/
[2] Cointelegraph (2021) XRP Price Analysis: 20 August. [online] Available at: https://cointelegraph.com/news/xrp-price-analysis-20-august
[3] Investopedia (2021) Ripple (XRP). [online] Available at: https://www.investopedia.com/terms/r/ripple.asp
[4] CoinDesk (2021) Ripple CEO: 'We're Going to Have a Banking License.' [online] Available at: https://www.coindesk.com/ripple-ceo-were-going-to-have-a-banking-license
[5] Cointelegraph (2021) XRP Price Analysis: August 21. [online] Available at: https://cointelegraph.com/news/xrp-price-analysis-august-21
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