On December 30, Ripple (XRP) fell over 4%, closing at $2.05 amid a broader crypto market nosedive driven by low liquidity and traders taking profits ahead of New Year’s Eve. On Binance, the token reached an intraday low of $1.99, showcasing the strong selling pressure currently endured by the crucial support level.
XRP, which rallied 230% since November on hopes of Trump’s victory securing the regulatory free pass for the US crypto companies, has been seemingly stuck in a consolidation phase since the beginning of December after exhausting the bullish momentum from post-election euphoria. The rally, initially fueled by speculation around the possible resolution of the Ripple vs SEC lawsuit, can no longer be sustained in the absence of positive regulatory and policy development, and retesting the levels below $2 may not be out of the table for XRP in the near perspective.
Not even Ripple’s RLUSD stablecoin debut could drastically improve the situation, only resulting in a short-lived pump that failed to hold. For context, RLUSD launched XRP Ledger and Ethereum on December 17 and currently sits at a modest market cap of $53 million. Despite the early stage of adoption, RLUSD saw a sharp rise in trading volume that soared 191% over the last 24 hours.
While RLUSD is enjoying the spotlight, XRP faced significant liquidations over the past 24 hours, with $4.46 million of long and $3.34 million worth of short positions wiped out as the price briefly dipped below $2 and then bounced back. The price decline coincides with a decrease in open interest, which currently stands at $1.9 billion, a far cry from $4.3 billion at the beginning of December, as per CoinGlass data.
The combination of low XRP price and low OI suggests that traders are closing their positions, seemingly confirming the suspicion that the current price drop is driven by liquidations and profit-taking rather than bears betting against XRP. Should this be the case, the XRP price is likely to stabilize soon in the absence of sustained selling pressure.
The exchange volume dropped as well to $3 billion over the past 24 hours, a 50% decline from a week ago. This reduced exchange volume, combined with shrinking open interest, points to waning interest from both bulls and bears amid the holiday-induced slowdown. As fever traders are active, there’s more room for potential volatility, since even modest buying or selling activity would be amplified by reduced market depth.
While current indicators point to a rather short-lasting price slip, crypto analyst Dom maintains a rather bearish outlook, describing XRP's recent price action as “incredibly weak.”
In their post on Twitter/X, the analyst explained that XRP risks a much more drastic drop in price if it falls into one of the so-called “liquidity voids,” the weak spots left behind if the price of an asset moves too quickly. During a strong bull run that XRP experienced in November, it didn’t have much time for the process of creating value, which happens when the price consolidates for some time at specific levels. The resulting areas of higher trading activity form “volume nodes” that often act as support or resistance.
The current support at $1.90 for XRP holds the price from slipping into the liquidity void. However, it becomes weaker every time it is retested, so a slow grind-down through this key level may send XRP as low as t $1.60, the analyst estimates. Conversely, reclaiming the $2.40 resistance will likely trigger a new rally for the cryptocurrency.
According to Dom, should BTC fall below $95,000, the odds of XRP breaking below $1.90 increase significantly. At the time of writing, Bitcoin is trading at $92.3k, down 1.33% over the last 24 hours.
What does 2025 hold for XRP?
Looking ahead, XRP’s next move will likely depend on renewed trading activity in early January, with Bitcoin’s performance shaping the direction for the altcoin till the Inauguration Day on January 20. After this date, traders’ attention will be focused on the policy changes brought by the new administration and developments in the Ripple vs SEC case.
Among other potential catalysts for XRP price growth are Ripple’s IPO, XRP ETF approval, and the growing adoption of RLUSD.
Ripple’s potential IPO, once postponed indefinitely due to the prolonged legal battle with the regulator, can be on the table again once the case is settled, which could boost both the company’s valuation and XRP’s credibility as a reliable investment. Similarly, the approval of an XRP-backed ETF would provide non-crypto-naive investors with hassle-free access to the asset, potentially driving billion inflows into the XRP market cap. Finally, the demand for RLUSD will strengthen the role of XRP as a bridge currency and allow the DeFi ecosystem of XRP Ledger to flourish.
