XRP Profit-Taking Signals Possible Delays in Recovery to $3

XRP profit-taking signals ‘weakness’: Will it delay recovery to $3?

Summary: XRP has shown a notable increase of 12%, reaching $2.53 following news of stimulus from former President Trump. However, as long-term holders start cashing out their profits, the potential for XRP's recovery could face significant hurdles, particularly with resistance levels identified between $2.60 and $2.80.

Key Takeaways:

XRP experienced a 12% rise to $2.53 due to Trump’s stimulus announcement.
Profit-taking activity by long-term holders may impede XRP's recovery.
Major resistance levels for XRP are observed at $2.60 to $2.80.

Increased Profit-Taking by XRP Holders

XRP’s ability to maintain momentum this week is under scrutiny as long-term holders (LTHs), defined as those who have held XRP for more than 155 days, are increasingly cashing in on their profits.

Data from Glassnode highlights that prior instances of profit-taking coincided with price surges, as LTHs locked in substantial gains. However, profit-taking has surged by 240%, moving from $65 million to $220 million in daily realizations since late September, noted Glassnode.

This uptick in profit-taking occurred amid a 25% decline in XRP’s price, dropping from $3.09 to $2.30.

XRP: Realized profit by profit margin. Source: Glassnode

Selling pressure has also been evident from larger holders (whales), who have ramped up their selling activities as XRP fell below the $3 mark. According to Santiment’s Supply Distribution metric, these whales, who possess between 1 million and 10 million XRP tokens, have sold off an extra 500,000 tokens in just the past 48 hours. Currently, they hold approximately 6.23 billion XRP, down from roughly 7 billion as of early September.

XRP: Whale addresses holding between 1M and 10M coins. Source: Santiment

On a positive note, the rate of outflows from whale wallets has decreased after a $650 million selling spree, which might indicate a potential bottom for XRP. This could create upward pressure in the coming weeks, especially with a renewed risk-on sentiment tied to the anticipated reopening of the U.S. government.

XRP Price Encounters Strong Resistance

The XRP/USD trading pair has been trending downwards, moving within a descending parallel channel. Currently, it is testing resistance at $2.60, an area that coincides with both the 50-day and 100-day simple moving averages (SMA).

A successful break above this resistance could pave the way for a move towards the upper boundary of the channel, estimated at $2.80 (the 100-day SMA). To target the psychological level at $3, bulls will need to overcome this resistance, with a further aim to reach a seven-year high at $3.66.

XRP/USD daily chart. Source: Cointelegraph/TradingView

The Glassnode distribution heatmap shows a significant concentration of XRP supply around $2.80, where around 1.86 billion XRP was acquired, potentially obstructing recovery efforts.

XRP cost basis distribution heatmap. Source: Glassnode

According to technical analyst ChartNerd, “the next goal for XRP is overcoming the $2.70 resistance.” As reported by Cointelegraph, if XRP can climb above the 50-day SMA at $2.63, and eventually push past the downtrend line at $2.80, it could indicate rising demand at lower prices and support a recovery towards the vital $3 level.