XRP Price Faces Potential Decline After 300% Surge: Warning Signs Emerge for Early 2025

XRP, the native cryptocurrency of the Ripple network, has seen an impressive 300% rally over the past two months, with its price reaching $2.10 on December 27, 2024. However, after this significant price surge, warning signs are emerging that suggest a potential correction in early 2025, with XRP possibly losing as much as 25% of its recent gains.

Descending Triangle Pattern Signals Possible Downturn

XRP’s recent price action has formed a bearish technical pattern known as a descending triangle. This pattern is typically indicative of further declines, with a series of lower highs forming the triangle's descending trendline. The $2.10 price level now serves as critical horizontal support for XRP, and a breakdown below this level could trigger further selling pressure.

If XRP falls below the $2.10 support, technical analysis suggests that the price could drop to around $1.64, representing a potential 25% decline from current levels. This price target is derived by calculating the height of the triangle and subtracting it from the breakdown point, a common method used to predict the potential magnitude of price corrections.

Whale Activity Points to Distribution

On-chain data further supports a bearish outlook for XRP, as large investors, or “whales,” appear to be taking profits. Wallets holding over 1 million XRP tokens have seen a significant reduction, with the supply held by these whales dropping by 180 million XRP since the beginning of December. Similarly, addresses with holdings of 100,000 XRP or more have seen their supply drop by 170 million tokens.

This trend of whale distribution is concerning, as it suggests that large investors are selling into the rally. When big holders offload significant portions of their holdings, it increases the supply of XRP in circulation, which can put downward pressure on the price, especially when combined with a decline in demand.

Rising XRP Reserves on Binance Indicate Profit-Taking

Another bearish signal comes from the growing XRP reserves on Binance, the world’s largest cryptocurrency exchange by trading volume. Since mid-December, XRP reserves on the platform have been steadily increasing. This typically precedes price corrections, as it suggests that traders and investors are moving their tokens to exchanges, potentially in preparation for profit-taking or selling.

The increase in XRP supply on exchanges, particularly Binance, adds to the bearish sentiment, indicating that the upward price movement may be losing momentum. With large holders continuing to sell and more XRP being deposited onto exchanges, the conditions seem ripe for a potential price pullback.

Potential 25% Downside Risk

As of now, the technical indicators and on-chain metrics suggest that XRP could face a 25% downside risk in the near term. If the current trends persist, a correction back to $1.64 or lower could be on the horizon. Unless the whale selling activity slows down and XRP’s supply on exchanges starts to decrease, the cryptocurrency may struggle to maintain its bullish momentum into early 2025.

Conclusion: Caution Advised for XRP Holders

While XRP has experienced significant gains in recent months, the warning signs are becoming more apparent as we approach 2025. The formation of a descending triangle pattern, increased whale distribution, and rising reserves on Binance all point to the possibility of a price correction. Investors may want to exercise caution and monitor these developments closely, as XRP’s price could face a substantial decline if current trends continue.