XRP Outflows Threaten New Gains

Ripple’s XRP has witnessed a remarkable surge recently, climbing to a new all-time high of $3.41 on January 16. However, this rally has triggered a wave of profit-taking among traders, which now threatens the sustainability of its recent gains. 

With mounting selloffs, XRP is poised to reverse the current trend. 

Ripple Rally Not Backed By High Demand

During Saturday’s trading session, outflows from XRP’s spot markets totaled $74 million. This represents its single-day highest capital outflow in the past 30 days. This follows a profit-taking trend that began after the altcoin reached an all-time high on January 16. 

When an asset experiences spot outflows, it suggests that investors may be selling or withdrawing the asset. This indicates caution or a lack of confidence, as some participants might be taking profits or moving assets elsewhere. 

Large spot outflows like XRP’s can put downward pressure on an asset’s price as more sellers enter the market. This can create a negative feedback loop, leading to further selling and a steeper price decline.

Moreover, XRP’s declining daily trading volume confirms the surge in selloffs. Over the past 24 hours, the token’s price has climbed by 2%. However, its trading volume plunged 26% during the same period, creating a negative divergence. 

This negative divergence is formed when an asset’s price rallies while its trading volume plummets. It indicates the weakening of the uptrend, as the price increase lacks broad market participation. 

This divergence suggests that XRP’s rally in the past 24 hours may not be sustainable and could be followed by a reversal or consolidation.

XRP Price Prediction: One of Two Things

At press time, XRP trades at $3.19. If selloffs continue, the token’s price will fall further from its all-time high of $3.41 to trade at support at $2.45.

However, if it sustains its current uptrend, it will revisit its all-time high and rally past it.