XRP recently corrected sharply amid a broader market crash, but here’s why this collapse was always on the cards.
For context, the latest correction came after XRP claimed a new peak of $3.66 on July 18. It immediately gave up this level as August opened and continued to battle the bears above $3 until the recent drop made it lose the psychological mark. Specifically, XRP collapsed 6.62% yesterday, its largest daily loss in a month.
Profit-Taking Trend Among XRP Holders
However, before this drop, The Crypto Basic called attention to a market trend that actually pointed to a massive decline. Specifically, while XRP changed hands above $3, the report revealed that about 94% of XRP wallets were in profit.
Nonetheless, the report noted that while this is an impressive metric in terms of profitability, it might point to a massive price crash in the short term, as most of the wallets that are now seeing gains could start executing profit-taking trades. This often leads to price declines.
Notably, historical data confirmed this pattern. For context, in January 2018, when XRP spiked to a new all-time high of $3.3, address profitability surpassed 90%. After this, XRP witnessed a steep drop, crashing by a massive 43.57% in January 2018 alone, and extended the downtrend to a 95.5% drop by the end of the correction.
This trend played out again after XRP recovered to the $1.96 high during the 2020/2021 bull run. Upon reaching this peak, XRP’s address profitability soared past 90% again. Expectedly, this led to another round of profit-taking trades, with XRP eventually collapsing by 85%.
XRP Showing Greater Resilience Now
Considering this trend, market analyst Winny argued that with XRP’s wallet profitability rising above 90% again, “someone” would eventually sell. This has since materialized, but not in full force. For context, an 85% collapse for XRP would lead to $0.45, and a 95% drop would result in a price of $0.15.
Notably, Winny suggested that this time might be different due to rapidly growing whale wallets, a spike in network activity, and positive chart patterns. While the profit-taking trades as well as the broader market downturn have pushed XRP below $3, it still holds firm at $2.9, now attempting to recover the psychological threshold.
Despite it trading at $2.9 at press time, XRP’s daily RSI still stands at a low 43.05. Notably, when XRP traded for $2.9 in mid-July, its RSI was already overstretched at 83.69. However, it still saw a run to $3.66 days later. With the current 43.05 RSI value, XRP has much more room for growth. As a result, a recovery here could push prices to new highs.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
