Originally published on: December 06, 2024
XRP has seen a significant drop of nearly 18% since its peak on December 3rd, causing concern among traders. While many are hopeful for a rebound, a crypto analyst warns that a rise in Bitcoin dominance could pose a serious threat to XRP bulls.
According to Pav Hundal, lead analyst at crypto exchange Swyftx, the real danger for highly leveraged XRP bulls lies in the potential increase of Bitcoin dominance. Should capital flow back into Bitcoin, a shift away from XRP could lead to a catastrophic wave of liquidations.
Bitcoin dominance currently sits at 55.27%, down 5% from the previous week. Some traders predict that this number could climb even higher before a rotation into altcoins occurs.
Hundal noted a surge in retail buying activity and a rising interest in leveraged XRP positions, indicating a potentially risky scenario for traders. Despite the price drop to $2.37, Hundal observed a trend of investors reloading XRP long positions, furthering the risk of liquidations should prices continue to decrease.
With XRP’s recent rally driven by geopolitical events, the market may be entering a phase of euphoria that could lead to increased volatility and risk. Hundal emphasized the importance of monitoring Bitcoin stability and funding rates to gauge market sentiment and potential risks.
As XRP continues to navigate these uncertain waters, it’s crucial for traders to stay informed, conduct thorough research, and make strategic decisions to mitigate risks in this dynamic market environment.
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