XRP has exhibited impressive performance over the last month. The Ripple-backed cryptocurrency surged unprecedentedly by more than 400% to reach its yearly high of $2.9 on December 3. Consequently, its market capitalization also surged significantly, reaching an all-time high of over $165 billion.
The sharp increase quickly pushed XRP four steps up on the global market chart, helping it secure the third spot after Bitcoin and Ethereum. However, the coin started nosediving, dropping one spot below Tether’s USDT, and now positioning it as the fourth-largest cryptocurrency by market cap.
Read Also: Is Ripple’s Stablecoin Launch Delay Behind the XRP Crash?
Even though several factors, including the recent announcement of a pro-crypto SEC chairman Paul Atkins, are somewhat in favor of the coin, it seems to have taken a different direction, plunging more than 10% in the last 24 hours to trade at $2.35 at the time of writing.
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While investors are hopeful for a return to its rally-ways, several technical indicators have pointed to a likely situation of XRP experiencing a significant correction that could drop its price even further.
XRP’s Technical Metrics Indicates Potential Crash
On the technical side of things, XRP’s relative strength index (RSI) now reflects 91, signaling an overbought position. This point is extremely rare and indicates an overheated condition in the market. Notably, the RSI peaked at 95 during the rally to $2.9 which is a visible warning of an imminent correction.
Citing historical data, such heated RSI often comes before a period of significant retracement. Notably, between November and December 2020, XRP crashed nearly 80% to $0.17 after its RSI climbed to a similar point as now. Importantly, XRP has now established critical support between $1.8 and $2.
Source: TradingView
Moreover, crypto analyst, Andrei, cautioned the XRP community on X recently, urging them to go easy on the leverage slider. He shared a heat map from Coinglass which reflects an unbalanced, and highly leveraged market.
Several community members reacted to the post, expressing their fear of an imminent crash. Despite these warnings, the XRP community is still confident in the future outlook of the project, and they believe it still has the strength to reignite the rally and forge on to its all-time high of $3.4.
Moreover, Ripple is getting ready to launch its highly anticipated RLUSD stablecoin which is expected to improve the use case of XRP and draw more demand to the project.
Read Also: XRP Reaches New Market Cap High Amid Concerns of Potential Correction
Victor Swaezy
Victor Swaezy is a crypto-journalist with more than 3 years of experience in covering blockchain technology and digital currencies news. Known for his comprehensive reporting, Victor has contributed to leading industry publications such as Coinfomania and Crypto News Guru, providing market participants with the required knowledge to make informed decisions. When he is not working, he loves to watch movies and have a good time.