Unraveling Ripple: Why XRP Plunged 25% Since December

• Notable Volatility in the Digital Asset Market Since 2024
• Investigating the Factors Behind XRP Price Decline
• Investor Behavior and Technical Data
• Absence of ETF Product News
• XRP Whale Drop

Notable Volatility in the Digital Asset Market Since 2024

The digital asset industry has witnessed significant volatility at the start of 2024. Several assets have not experienced the expected brisk start to the year, with Ripple's XRP$0.620 -1.68% token being one of the most impacted. The Ripple token has depreciated by 25% since late December. Moreover, in line with the broader digital asset market, the asset has observed a sharp decline recently. According to CoinMarketCap, XRP is down by more than 3% over the past 24 hours, although it was down by as much as 7% at one point during the day.

Investigating the Factors Behind XRP Price Decline

The crucial question that arises from this trend is: why has the XRP price been impacted to such an extent that it is experiencing substantial decreases early in the month? To answer this, we need to explore three significant reasons that have contributed to XRP's decline since December.

Investor Behavior and Technical Data

A primary reason behind Ripple's 25% decrease since December is a combination of investor behavior and technical data. Specifically, the overall downtrend forms part of a more extensive narrative for the digital asset. Assets often undergo such a downturn when they test a descending trendline resistance that spans multiple months. XRP retested this trendline on December 28, triggering its substantial decline. The asset is facing another technical threshold this week, a multi-month ascending trendline support. While this could signal recovery, the current momentum is not favoring the asset. XRP has been trading below several moving averages, and the Relative Strength Index (RSI) indicates a potentially oversold state. Whether this will attract buyers and act as a catalyst to bring the asset back to manageable levels is yet to be seen.

Absence of ETF Product News

Spot Bitcoin$42,260 -0.64% ETFs were prominent in the digital asset market early into 2024, generating significant optimism over their potential approval. When these investment products were greenlit on January 11th, the industry's reaction was not as expected. The sentiment around Bitcoin indirectly impacted XRP as many anticipated a similar ETF for XRP. Despite regulatory issues surrounding the asset, many believed that asset managers like BlackRock would recognize the value of the Ripple token. However, expectations started dwindling when reports surfaced that the asset manager was not interested in launching the investment product. This disinterest was comprehensible, considering the ongoing lawsuit involving ETF Issuers, the US Securities and Exchange Commission (SEC), and Ripple. This revelation led to a 13% drop in the asset. Despite the likely positive outcome of the lawsuit, it seems the industry has developed a concerning view of the asset's place in the broader cryptocurrency landscape.

XRP Whale Drop

Lastly, a significant factor contributing to Ripple's considerable fall since December is linked to the decline of large holders of the digital asset. Specifically, XRP's overall decline can be correlated with a drop in some of its most substantial holdings. Observations of addresses with a balance of 100 million to 1 billion tokens revealed a drastic decrease in January. This decrease ran parallel to an increase in investors who hold between 10 million and 100 million tokens. This indicates that those addresses that were holding close to a billion XRP tokens either sold or redistributed their XRP, which has contributed to the overall declining price of the asset since the beginning of the year.

Edited by Jonathan Stoker