XRP has increased nearly 27% over the past week, thanks to ETF optimism and strong demand. The price has recently broken through the significant resistance level at $2.725, and the elusive $3 mark is certainly within reach. However, on-chain data currently shows signs of cooling. Two key indicators are rising sharply, which may lead to a short-term correction before the uptrend continues.
Most XRP Holders Are Profiting
More than 98% of the total circulating XRP is currently in profit. This means that most holders bought XRP at lower prices and are now seeing returns.
While this is favorable for market sentiment, it also increases the risk of profit-taking. When most people are in profit, some may choose to sell, especially after a strong rally. This could create short-term resistance for the next uptrend.
The supply in profit simply shows how much of the circulating XRP is currently worth more than the purchase time.
XRP Supply on Exchanges is Increasing
The XRP balance on exchanges has surged to 3.949 billion tokens, the highest in over four months. This surge coincides with the recent price increase of XRP from $2.16 to $2.83. Compared to June 23, more than 519 million XRP, worth about $1.47 billion, have been transferred to exchanges.
The only way for this not to affect the price is for large investors to quickly step in and buy back the excess supply. Otherwise, this potential liquidity of $1.47 billion could pull the price down from its current level.
Exchange balance tracks the amount of XRP circulating on centralized exchanges, ready for trading. This metric often spikes just before a large-scale sell-off.
XRP Price Update: The Decline Still Has Bullish Characteristics
XRP is trading below $2.90 after breaking through the resistance threshold of $2.725, which is the 0.786 level of the Fibonacci extension lines drawn from the low of April to the high of May to the low of June.
Fibonacci Extension based on trends is a charting tool that uses three points: low point, high point, and retracement point to predict potential future resistance levels or price targets in a trending market.
The next resistance level is $2.949. If sellers come into play, potential support levels lie at $2.725 and $2.550. A deeper correction would only invalidate the entire bullish structure if the price breaks below $2.30.
This would push the XRP price into the trading range that has occurred since late April. For this strong correction, those who subscribe to the 'Supply in Profit' theory will have to start selling XRP more aggressively.
Additionally, if the price of XRP breaks the resistance zone of $2.949, the subsequent decrease in trading balance, the retracement hypothesis may no longer hold true, almost confirming the next bullish rally.
