XRP Price Dip Below $2: Is Profit-Taking About to Intensify Across the Market?

In November 2024, Ripple created a significant bullish trend when XRP broke into the $2 range for the first time ever. This milestone led to the price holding above $2 and eventually reaching an all-time high of $3.68. However, as of December 15, XRP has fallen below the $2 mark, indicating an increase in bearish sentiment.

Key Takeaways

XRP's price has dropped below $2, marking a rise in bearish sentiment.
Long-term investors are showing signs of fading confidence, with significant profit-taking taking place.
Institutional investment in XRP has decreased sharply, reflecting lower buying activity.
Whale activity has been minimal, which could impact market dynamics further.
Overall, market sentiment is leaning towards bearish, raising concerns over XRP's future performance.

XRP Price Dip Below $2 - Is Profit-Taking About to Intensify Across the Market?

AMBCrypto explores the reasons behind this shift and its implications for the future of this altcoin.

Long-Term Investors Show Decreasing Confidence

One notable sign of growing bearish momentum is the behavior of long-term holders. These investors, defined as those who have kept Ripple [XRP] for over 155 days without making transactions, are showing a lack of confidence in the asset's future potential.

Data from Glassnode indicates that holders with XRP aged five to seven years booked approximately $721.5 million in profits on December 11, when XRP's price was about $2.03. Their average purchase price was roughly $0.40, demonstrating a wide profit margin.

XRP Realized Profit by Age Source: Glassnode

The decision to take profits at such a high market price suggests that these long-term holders are uncertain about XRP's future growth. Adding to this uncertainty, Ripple Co-Founder Chris Larsen sold more than 200 million XRP in previous months, raising concerns about the altcoin's long-term prospects.

Institutional Investors Are Stepping Back

Adding to the bearish sentiment, institutional investors in XRP have also reduced their involvement. The data indicates a significant decline in purchasing activity over the last month, particularly evident in U.S. XRP Spot exchange-traded funds (ETFs).

Buying volume dropped dramatically from $246.05 million in November to just $8.54 million by December 16. This represented a staggering 96.49% decrease in buying activity, underscoring deteriorating sentiment among institutional investors.

XRP Purchasing Activity Decline Source: CoinGlass

Additionally, XRP's exchange reserves rose to 2.66 billion tokens, which signals a higher availability for potential sell-offs. If these reserves flood the market, XRP’s price could face further decline beneath the $1.88 level. Notably, institutional selling commenced before retail traders responded, suggesting a potential acceleration in downside risks if this selling continues.

Whales Show Minimal Activity

Whales, or large investors who can significantly influence market trends, have remained largely inactive in the current climate. The Whale-to-Exchange Flow metric, which tracks the volume of XRP transferred between whale wallets and exchanges, has dropped to zero, indicating a lack of significant trading activity among whales.

XRP Whale to Exchange Flow Source: CryptoQuant

The last major movement by whales was observed on October 25, after which XRP's price fell from near $2.6 to around $2.2. Since then, whale activity has sharply contrasted with the more active trading period from July to October. If whales do begin relocating their assets again, historical trends suggest that this could pose new risks for XRP's value.

Despite this, spot market data indicates remains of strong taker buy activity, which has temporarily stabilized XRP’s price.

Conclusion

As XRP continues to grapple with bearish sentiment and declining investment activity, the outlook for the altcoin remains cautious. Long-term holders and institutional investors are showing signs of retreat, and whale activity remains minimal. If current trends persist, XRP might face further challenges in the coming months.