Originally published on: December 06, 2024
XRP has experienced a significant drop of nearly 18% since reaching its peak on December 3rd, leaving traders anxious for a potential comeback. However, their hopes for a recovery could be dashed if Bitcoin’s dominance in the market continues to rise, according to a leading crypto analyst.
Pav Hundal, the lead analyst at crypto exchange Swyftx, cautioned that highly leveraged XRP bulls are at risk if Bitcoin’s dominance surges once again. He highlighted the possibility of a mass liquidation event if capital starts flowing from XRP back into Bitcoin.
The current Bitcoin dominance stands at 55.27%, a decline of 5% over the past week, as indicated by TradingView data. Some traders speculate that this figure could climb to as high as 60% to 70% before a shift towards altcoins takes place.
Hundal pointed out the growing interest in leveraged long positions on XRP, despite the recent price dips. He noted, “We’ve seen a lot of quick buying from retail traders lately, with open interest levels almost double of what we saw in 2021.”
XRP is currently trading at $2.37, and even a small retrace to $2.18 could result in the closure of long positions worth $104.4 million. Hundal expressed concerns that the market might be entering a phase of euphoria, with rising levels of leveraged exposure on XRP.
The XRP/BTC ratio has also shown significant strength, increasing by 2.72% since December 5th and by a remarkable 47.6% in the past month, according to TradingView data. If Bitcoin manages to stabilize, Hundal believes that nerves could settle, leading to a potential increase in trading volumes.
While the funding rates on Binance remain muted, other exchanges are seeing warmer rates, indicating an elevated level of investor enthusiasm. Hundal advised caution, stating that funding rates above 50% are considered exuberant in the current market environment.
Disclaimer: This article does not provide investment advice. Readers are advised to conduct their own research before making any financial decisions.
