The price of XRP fell 7.25% to $3.05 on January 18, after an earlier gain this week on speculation the token might be added to a proposed U.S. strategic reserve. Its fall came after unfounded rumors over the weekend that President-elect Donald Trump could consider adding cryptocurrencies like XRP into an “America-first strategic reserve.”.
The rumor sent investors into a frenzy and drove the price of XRP up by more than 45% to near its all-time high of $3.55. But the failure of any confirmation of the claims on Trump’s plans has seen a quick correction in the market. No official announcement has been made to confirm rumors over Trump’s inauguration and the so-called reserve news.
XRP Faces Volatility Amid Price Correction Fears
Further dampening the enthusiasm, there were reports of a fallout between Trump and Ripple, the company behind XRP, over political donations to Kamala Harris. However, Ripple’s Chief Legal Officer Stuart Alderoty firmly denied the reports, adding to the uncertainty over XRP’s rally.
This drop in the price of XRP was also accompanied by heavy liquidations in the futures market as longs were forced to sell off.
According to data from CoinGlass, over $17 million in long XRP positions were liquidated in the last 24 hours, compared to just $8.56 million in short positions. These forced sales further added to the downward pressure on an already faltering price.
With this new price action, it becomes an indication of concerns about the sustainability of the upward momentum of XRP. Market analysts indicate that there is a bearish divergence between the rising price of the cryptocurrency and a falling RSI, a sure sign that the rally is weakening. There are growing fears that XRP might experience a significant price correction any time soon.
Although the price of XRP was well above its cardinal 50-day exponential moving average (EMA) of $2.28-30% less in value from current times, traders were keen about reversal signs, and if history can be a referral, it shows that when the price seems to overextends above key support areas, it consistently tracks back on previous instances or occurrences. Indeed, it became so in 2018 when all of a sudden XRP provided the same number of divergence for an 80% drawdown.
The future of XRP is not really certain at this moment, and traders are preparing for some volatility further over the next few weeks.
