XRP’s price dipped below $0.57 on April 3 amidst a global downturn in the cryptocurrency market, with concerns rising about a unique selling trend among large investors that could worsen the downward trend.
The digital currency XRP, supported by Ripple, has been experiencing significant price fluctuations in recent days due to ongoing legal disputes with regulators. Data from blockchain transactions offer insights into the key factors driving the bearish market sentiment and how XRP prices may be affected in the coming days.
Whale investors have reduced their holdings to a 30-day low following a proposed $1.95 billion fine from the US Securities and Exchange Commission (SEC) on Ripple, as disclosed by Ripple CEO Brad Garlinghouse on March 25. The SEC’s claims against Ripple for selling XRP as securities have led to uncertainty among investors, prompting a flurry of selling activities.
Despite assurances from Ripple’s CEO that the company can cover the fines, on-chain data indicates that large investors and corporate entities holding substantial amounts of XRP are not as optimistic. The chart below illustrates the decline in whale investors’ wallet balances following the SEC’s filing of the $2 billion fine motion on March 29.
Since the initiation of the selling spree by XRP whale investors, over 290 million coins have been offloaded, reducing their balances to a 30-day low of 44.9 billion. This significant volume of coins flooding the market is likely to drive prices further down, with XRP already experiencing a 13% drop since the selling began on March 29.
Retail traders may hesitate to take bullish positions against such large investors, and the overall sentiment in the derivatives market also suggests a lack of optimism among speculative traders. The funding rate metric shows a decline in sentiment among bull traders, indicating a potential further decline in XRP prices.
With XRP currently trading below $0.58 and facing pressure to break above $0.62, the market is at a critical juncture. If support levels are breached, XRP could see a substantial price drop below $0.55 in the near future. Bulls may regain control if prices manage to break above key resistance levels, but the dominance of selling activity among whale investors poses a significant challenge.
In conclusion, the uncertain regulatory environment and selling pressure from large investors suggest that XRP’s price could face further downside risks in the days ahead. Traders and investors need to closely monitor market developments to navigate the volatile cryptocurrency landscape.