On November 16th, XRP (XRP) reached a three-year high of $1.26 as the cryptocurrency market anticipated a favorable regulatory environment for cryptocurrencies and the potential resolution of Ripple’s long-standing legal battle with the US Securities and Exchange Commission (SEC).
The Rally and the Pullback
However, since then, XRP price has significantly pulled back, leaving many to question whether $1.26 was the top, at least for now.
The Daily Chart
XRP/USD daily chart. Source: TradingView
Whales Take Profits
The pullback on November 17th aligns with substantial inflows worth tens of millions of dollars into Bitstamp and other exchanges, according to data from Whale Alert.
That includes a whale's transfer of 10 million XRP tokens worth $11.3 million into the Bitstamp crypto exchange. This transfer is likely part of the investor’s intention to cash in on their gains following XRP’s big rally.
Source: Whale Alert
XRP Supply Distribution
The timing of these substantial XRP transfers to exchanges is noteworthy, as it aligns with a critical shift in the distribution of XRP holdings.
Specifically, there is a substantial increase in the XRP supply on exchanges, as evidenced by data from CryptoQuant. The chart below shows that the exchanges’ XRP balance increased by 3% between November 6th and November 16th.
XRP reserve on exchanges. Source: CryptoQuant
This suggests possible whale profit-booking to drive the 13% pullback since the Nov 16 highs.
Retail Traders Selling into XRP Rallies
Additionally, Santiment explains that retail traders have also been selling into ‘any small XRP rally,’ and the scenario following the rally to $1.26 was no different.
Wallets with under 1M XRP have collectively dumped 75.7M tokens (worth $87.9M) this past week.
Source: Santiment
This group of wallets, however, has also been accumulating more tokens. In the past week alone, they have scooped up 453.3M more tokens (worth $526.3M).
XRP whale wallet holdings. Source: Santiment
Volatility and Liquidations
The volatility caught long traders off-guard when XRP sharply turned away from its multi-year high of $1.26.
Data from CoinGlass shows that the XRP derivatives market witnessed over $12.6 million worth of liquidations on November 17th, out of which $9.1 million were long, with the tally continuing at the time of publication.
XRP liquidations. Source: CoinGlass
When long positions are liquidated, it generally involves selling off the asset (voluntarily or by the broker), pulling prices down further.
RSI Overbought Conditions
A heatmap of XRP’s RSI currently shows overbought conditions in four out of six timeframes, according to data from CoinGlass.
Crypto market RSI heatmap. Source: CoinGlass
By comparison, Bitcoin’s RSI is overbought on three of six timeframes.
Trader Expectations
Despite this popular metric showing potential overheating, traders believe that the XRP price rally is not over.
"It’s so early in the cycle for such an XRP pump," said independent trader Chris McCrypto in a November 16th post on X, adding that XRP price could go as high as $15-$20.
Meanwhile, pseudonymous analyst CryptoCharged opined that the ongoing pullback has seen the price retest key levels ‘to perfection’ adding that a drop to the $0.65 and $0.75 zone would reset the chart for another move higher.
Conclusion
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
