XRP's price dropped sharply by more than 12% after a significant price increase in July, affected by profit-taking and psychological pressure after reaching historical peaks.
Today's price decline reflects a weakening investor sentiment towards altcoins as Bitcoin regains dominance, creating downward pressure on XRP in the context of the Altcoin Season Index currently at a low level.
MAIN CONTENT
XRP's price drop is due to profit-taking pressure after a period of over 60% increase in July.
The altcoin season is weakening, Bitcoin's dominance is increasing again, negatively affecting XRP.
Technical analysis shows that the decline is a healthy correction, and the long-term trend remains positive.
Why did XRP's price drop sharply today?
XRP's price drop is mainly due to investors taking advantage of high prices to lock in profits after a strong increase, leading to increased market liquidity and heightened selling pressure.
At the beginning of July, XRP was only trading at $2.17, but after 16 days, the price peaked at $3.66 — the highest of the year, equivalent to an increase of over 60%. This impressive increase stimulated many investors to buy in, while also creating an attractive profit-taking point for short-term traders.
However, as the price approached the peak of $3.66, buying pressure began to weaken, and a corrective trend became evident. On July 23, the price dropped more than 10% in one session and continued to decrease to around $3.04 today, indicating that selling pressure still exists.
Profit-taking after a strong price increase
Short-term traders have taken advantage of the price increase to lock in profits ahead of potential reversal risks. This is a common move in the cryptocurrency market when assets experience significant short-term gains.
The closing price lower than the peak in the session on July 18 ($3.41 compared to $3.66) is the first signal indicating a cooling of demand. Since then, XRP has continuously traded within a narrow price range before breaking down.
"Selling pressure after a hot increase is inevitable for the market to continue to develop sustainably in the long run."
Nguyen Van Hung, Director of the SmartCapital Investment Company Branch, 07/2024
How does the altcoin market factor affect XRP's price?
XRP is heavily influenced by the broader trend of the altcoin market, as the shift of capital flows from altcoins to Bitcoin increases due to Bitcoin's renewed strength.
According to the Altcoin Season Index data for July, the index is currently at 37, much lower than the threshold of 75 indicating a 'strong altcoin season,' so the upward momentum of major altcoins like XRP is weakening.
Capital flows are starting to return to Bitcoin, leading to a decrease in demand for other large-cap altcoins, including XRP.
"The Altcoin Season Index dropping below 40 indicates that the market is focusing on Bitcoin as a safe haven asset, reducing investment momentum in other cryptocurrencies in the short term."
Tran Thanh Binh, Financial Market Analyst – 06/2024
What does the current technical analysis indicate about XRP's price?
XRP remains above the 50-day EMA around $2.64, which is a positive signal indicating that the long-term trend has not been broken and still leans towards upward movement.
The RSI index at 55.81 indicates a state of neither overbought nor oversold, consistent with the correction phase following the recent strong growth.
The short-term price drop is seen as a reasonable correction, helping to eliminate hot buying pressure and create momentum for a new upward trend, rather than starting a prolonged downtrend.
Index Before Drop Current Meaning July Peak Price $3.66 $3.04 Decreased over 12%, correction after strong increase 50-day EMA $2.64 $2.64 Technical support remains solid RSI Above 70 (overbought) 55.81 Stable, healthy correction trend Altcoin Season Index Near 75 (strong) 37 (weak) Attention shifts to Bitcoin
Frequently Asked Questions
Is today's decrease in XRP's price a sign of a long-term downtrend?
No, based on the technicals and the 50-day EMA position, this is just a correction after a strong increase; the long-term trend remains positive.
Is the current time a strong 'altcoin season'?
The Altcoin Season Index is low at 37, indicating that it is not a strong altcoin season, and the market is prioritizing Bitcoin.
How does profit-taking pressure affect XRP's price?
Profit-taking pressure causes short-term price drops when investors lock in profits, but it often helps the market to adjust more healthily.
Can XRP surpass the historical peak of $3.84 this year?
Breaking the historical peak depends on the overall market trend and sustainable buying pressure; currently, XRP is close to this level but needs more strong momentum.
What should be monitored to assess the price trend of XRP in the coming time?
Attention should be paid to the 50-day EMA support level, RSI, and volatility on the Altcoin Season Index alongside the overall demand in the cryptocurrency market.
Source: https://tintucbitcoin.com/nguyen-nhan-xrp-giam-gia-hom-nay/
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