Understanding the Ongoing Decline in XRP Prices

The on-chain analytics platform CryptoQuant has shed light on the reasons behind the recent decline in XRP prices, which have recently fallen below the crucial $2 mark. Despite hopes surrounding the approval of XRP ETFs, it appears that the selling pressure has not only remained but intensified.

Key Takeaways

XRP's price is under significant pressure from whales holding large amounts of the cryptocurrency.
Analysts identify that increased inflow to exchanges is leading to more selling activity.
Key price levels indicate the possibility of XRP declining further if selling continues.
The anticipated institutional demand from XRP ETFs has not materialized as expected.

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Why Is XRP's Price Dropping Despite ETF Hopes?

According to a report from CryptoQuant, analyst PelinayPA pointed out that XRP faces considerable selling pressure, primarily from whales—investors who hold between $100,000 and $1 million XRP and those with over $1 million. This group of XRP whales is responsible for most of the inflows into the cryptocurrency exchange Binance.

These movements suggest that these whales are often looking to sell, resulting in upward pressure on the selling side of XRP. PelinayPA noted that after each substantial inflow spike recorded on the chart, the price of XRP tends to form a pattern of lower highs and lower lows, indicating that supply currently exceeds demand.

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Source: Chart from CryptoQuant

The report also explained that the absence of strong new buyers is a key factor in the situation. The continuous rise in available XRP supply has been pushing prices down, even with whales not aggressively selling off their holdings. PelinayPA highlighted important support levels to monitor as XRP continues its downward trend. She specified that the first major support zone is between $1.82 and $1.87, where the price previously stabilized and small buyers showed interest. However, if large outflows persist, XRP risks dropping further into the $1.50 to $1.66 range. The current market dynamics suggest that a price rally is not imminent.

Whales Exploit the ETF Excitement

The CryptoQuant report noted that the XRP ETF process was anticipated to boost institutional interest and drive prices up through spot buying. Contrary to this expectation, however, high-volume inflows of XRP into Binance have occurred. PelinayPA observed that whales acted quickly as optimism about ETF approvals grew.

According to the analyst, XRP that was accumulated in anticipation of the ETF developments was transferred to exchanges and used to provide liquidity for selling. Essentially, whales profited from the ETF approval narrative, positioning themselves to sell to retail investors. Consequently, XRP faces substantial selling pressure, especially as it approaches the $1.95 mark.

PelinayPA emphasizes that expecting a bullish move before a decline in exchange inflows is an unrealistic expectation. However, it's important to acknowledge that XRP ETFs have been performing well, gathering over $1 billion in net assets merely a month after launching.

As of the latest data, XRP is trading around $1.90, reflecting a nearly 4% increase over the past 24 hours, according to CoinMarketCap.

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XRP trading at $1.92 on the daily chart | Source: XRPUSDT on Tradingview.com