XRP has experienced an impressive rally over the past two months, with its price surging by over 300% to reach a local high of $2.90 in early December 2024. However, the bullish momentum appears to be faltering, with several warning signs suggesting the possibility of a significant correction in early 2025.
Descending triangle formation signals bearish outlook
XRP’s price chart shows the formation of a descending triangle pattern, a classic bearish structure in technical analysis. This pattern is characterized by a series of lower highs that form the triangle’s descending trendline, while horizontal support lies at $2.10.
A breakdown below the $2.10 support level could trigger a deeper price correction. According to technical analysis, the potential downside target for such a breakdown is calculated by subtracting the height of the triangle from the breakdown point. Based on this formula, XRP price could drop to approximately $1.64 in January 2025—a decline of about 25% from current levels.
On-Chain data highlights whale distribution
On-chain metrics further bolster the bearish outlook for XRP. Messari data reveals a sharp decline in the holdings of large investors, often referred to as whales.
Wallets holding over 1 million XRP tokens have collectively reduced their balances by 180 million tokens since early December.
Similarly, addresses with a balance of at least 100,000 XRP have sold off 170 million tokens during the same period.
This widespread selling by large holders aligns with XRP’s 26% price decline from its local high of $2.90, indicating that whale distribution may be exerting significant downward pressure on the XRP Ledger native token’s price.
Read also: Implications as XRP Ledger reduces base reserve from 10 XRP to 1
Exchange reserves add to bearish pressure
Another concerning bearish trend is the steady increase in XRP reserves on Binance, the largest cryptocurrency exchange by trading volume. Rising exchange reserves typically signal growing sell-side pressure, as investors transfer tokens to exchanges for potential liquidation.
This trend, combined with ongoing whale selling, suggests a dominant profit-taking sentiment at recent local highs. The result is an increase in the circulating supply of XRP, potentially overwhelming demand and contributing to further price declines.
What lies ahead for XRP?
Unless these bearish trends reverse, XRP’s price may remain under pressure in the short term. Key factors to watch include:
- Whale activity: Continued reduction in holdings by large investors could exacerbate selling pressure.
- Exchange reserves: A further rise in XRP supply on crypto exchanges such as Binance may signal heightened risk of a deeper correction.
- Support levels: The $2.10 level is critical for maintaining bullish sentiment. A breakdown could open the door to the $1.64 target.
While XRP has demonstrated remarkable gains in recent months, the combination of a descending triangle , increased whale distribution, and growing exchange reserves suggests a potential 25% downside in early 2025. Accordingly, investors should trade with caution and stop loss, keeping an eye on critical support levels and on-chain data for signs of a potential reversal or further declines. Notably, XRP is changing hands at $2.15 at the time of writing, down over 1.2% in the past 24 hours.
Read also: Ripple and XRP Explained.
Ndianabasi Tom A Petroleum Engineering degree holder, Ndianabasi’s interest since 2018 has been studying the ever-growing field of blockchain and cryptocurrency, keenly evaluating the innovation, exploration, and expansion of this field locally and globally. The founder of Nitadel a media platform, Ndianabasi has been a Writer at Crypto Asset Buyer (CAB) since 2021. When he is not drilling resources in the blockchain and cryptocurrency field, Ndianabasi is singing, reading, watching crime movies, or playing football.
