Key Points to Note
The price of XRP declined by 4% as major holders sold off 470 million tokens. Liquidation levels below $2.60 suggest potential for further price drops. Institutional investors are showing increased negativity, while Chainlink’s growing partnerships with Swift and JP Morgan are challenging XRP’s position.
Cryptocurrency markets experienced a downturn over the past day, with the total market capitalization decreasing to $3.84 trillion. However, daily trading activity increased by 8%, reaching $186 billion.
Ripple (XRP), currently the third-largest cryptocurrency by market cap, saw a 4% price decrease. It risks even greater declines if the overall market doesn’t recover.
Let’s examine the factors contributing to XRP’s current weakness.
Large XRP Holders Initiate Sell-Off
According to insights from analyst Ali Martinez on X (formerly Twitter), significant XRP holders have been actively selling their tokens.
Over the last ten days, these major players have sold off over 470 million XRP tokens as prices hovered around the $3 mark.
This significant selling activity coincided with a broader market decline, including Bitcoin (BTC). Notably, selling pressure has been present since late July when XRP was trading near $3.50.
Source: Ali Charts/X
The total XRP outflow during this period reached nearly 1 billion tokens. The price movement of XRP reflected this significant sell-off.
Increased Selling Pressure on XRP
The price of XRP against USDT has been declining rapidly since reaching a high of $3.50. The cryptocurrency has been forming a pattern of lower highs and lower lows, indicating strong bearish momentum.
The MACD indicator also confirms increasing selling momentum, driven by new short positions opening in the derivatives market.
Source: TradingView
The introduction of perpetual futures contracts for XRP and Solana (SOL) by Coinbase also attracted more short sellers from the U.S., according to CEO Brian Armstrong.
Analysis of derivatives market data suggests a higher likelihood of further price declines for XRP. The price has been decreasing as long positions below the current price are liquidated.
Data from CoinGlass indicates significant clusters of highly leveraged (50x–100x) short positions between $3.05 and $2.85, contributing to XRP’s downward momentum.
Source: Trading Different
The largest liquidation concentrations are located below $2.60, potentially extending towards $2 and even $1.80. Conversely, short positions are concentrated between $3.40 and $4.20.
Overall, a bearish outlook prevails for XRP.
Diminishing Institutional Interest
According to Market Prophit, overall market sentiment is leaning towards the negative. Institutional sentiment is significantly more bearish (-5) compared to retail sentiment (-1.61), suggesting a strong negative bias among larger investors.
Furthermore, XRP appears to be losing ground to Chainlink (LINK) in terms of institutional adoption, according to Zach Rynes.
In an interview on X, Chainlink advocate Zach Rynes pointed out that Swift and JP Morgan have chosen Chainlink over XRP.
Zach Rynes stated,
“XRP’s main product hasn’t gained significant traction with major institutions. Chainlink appears to be the clear leader in this area.”