XRP price is down today as South Korea’s political turmoil, profit-booking and overheated conditions could lead to a deeper correction in the short term.
XRP XRP $ 2.61 is down 5% in the last 24 hours to trade at $2.61 on Dec. 4. The decline is part of a broader correction that started on Dec. 3 after news of South Korea declaring martial law sparked panic selling among investors.
Let’s look closer at the factors driving XRP price down today.
XRP slides on South Korea’s political turmoil
XRP price is up more than 400% month-to-date, but this rally was temporarily halted following a political crisis in South Korea. The price of the remittance token dropped by 8% on Dec. 3 following news of South Korean President Yoon declaring martial law.
The news triggered panic selling among investors across the board, with crypto prices on South Korea-based cryptocurrency exchanges trading significantly lower than elsewhere.
For example, the XRP/KRW trading pair saw one of the biggest flash crashes due to the country’s high concentration of XRP holders and crypto users in general.
Notably, the XRP price on Upbit, the largest cryptocurrency exchange in South Korea by trading volume, flash-crashed more than 50% to $1.30. Upbit holds the largest XRP reserve among centralized exchanges.
Profitaking has also been rampant, with XRP investors realizing over $4 billion in profits over the last three days, according to data from Santiment. This is the highest profit-taking on record since April 2021.
Increased profit-taking is evidenced by the high number of XRP tokens flowing into exchanges over the last few days, according to data from CryptoQuant.
The number of XRP being moved into exchanges has increased from 46 million to 654 million over the last seven days.
The movement of an asset to exchanges usually signals an intention to sell among investors as they realize profits.
Buyer exhaustion stalls XRP price rally
Data from TradingView shows XRP’s impressive rally over the last month has pushed the relative strength index (RSI) above 70 on both shorter- and longer-timeframe charts, indicating “overbought” conditions.
The RSI heatmap shows XRP’s RSI at 74 and 84 on the 12-hour and daily timeframes, respectively, based on data from CoinGlass.
An overbought RSI implies that the asset is overvalued and the buyers have become exhausted. Consequently, traders may take this as a signal to sell and lock in profits, leading the price to either consolidate sideways or fall further.
The downside target, and likely strong support, in the short term is around $2.50, which could provide a good entry position for those late to the XRP price rally.
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