XRP recently reached a new all-time high (ATH) before entering a period of sideways consolidation. This altcoin has struggled to surpass resistance levels but has also avoided a major correction.
However, this state of equilibrium may not last long as investor behavior signals a change in momentum.
XRP investors are not confident
Investors have begun to liquidate a large amount of XRP, indicating that confidence in the next bullish momentum is waning.
In the past week, wallets on exchanges have witnessed an inflow of nearly 450 million XRP, valued at over 2.81 billion USD. This sudden surge in supply indicates that holders are moving their assets to exchanges with the intention to sell, often a bearish signal in market cycles.
Profit-taking seems to be driven by concerns that XRP has peaked in the short term. As investors seek to preserve profits, pressure on XRP's price will increase. Continued selling could drag the price below the nearest support levels, making recovery more challenging.
On-chain data from Glassnode further reinforces the bearish sentiment. The Liveliness index, a measure used to track the behavior of long-term holders (LTH), is currently at its highest in three months. This indicates that LTH are currently selling XRP. The change in their behavior suggests potential downward pressure.
In the past, the increase in the Liveliness index often occurred before market corrections.
Since LTH hold a large portion of the supply, their decisions significantly impact price trends. The increase in the Liveliness index reflects a major shift in market outlook, consistent with the recent rise in supply on exchanges and weakening bullish sentiment.
Can XRP continue to set new ATHs?
XRP is currently trading around $3.51, just about 4% away from ATH. Although nearing the highs, this altcoin is showing signs of weakness and is clinging tightly to the support level of $3.38. Without new buying force, XRP may struggle to maintain this level.
If investors continue to sell, the price could drop below $3.38 and test the support level of $3.00, erasing some of the recent growth momentum and confirming a short-term bearish reversal.
Losing $3.00 could signal a longer consolidation phase or a deeper correction.
However, if market participants absorb the sold supply and restore demand, XRP could recover quickly.
In this scenario, altcoin has the potential to exceed $3.66, break through $3.80, and aim for a target of $4.00. Such a move would invalidate the bearish outlook and help XRP form a new ATH.