Coinspeaker

6 December 2024

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XRP Price Faces Potential Decline as Bitcoin Dominance Increases

After reaching $2.75 earlier this week, XRP price faces selling pressure and may drop significantly if Bitcoin's market dominance increases. Currently trading at $2.28, XRP is down 18% from its peak on December 3, with a market cap of $130.42 billion. Daily trading volume has decreased by 50% to $13.75 billion.

Bitcoin's price surged to $104K this week, increasing its market dominance to 55% in the $3.5 trillion crypto market. Market analysts suggest that BTC dominance could rise further to 60-70%, potentially triggering capital rotation to altcoins and impacting previously high-performing altcoins like XRP. Pav Hundal, lead analyst at Swyftx, stated:

“The real danger right now for highly leveraged XRP bulls is that Bitcoin dominance increases again. A rotation from XRP to Bitcoin would very likely lead to a bloodbath of liquidations. We’ve seen a lot of quick twitch buying by retail over the last few weeks, and open interest is now close to double the levels we saw in 2021.”

In the last 24 hours, XRP experienced a 5.32% pullback, with open interest dropping 6% to $3.51 billion. Long liquidations for XRP surged to $32 million, according to CoinGlass data. Hundal remarked:

“It’s starting to look like the market could be approaching euphoria territory.”

How Long Will XRP Price Correct before Bouncing Back?

Analysts have identified two potential corrective wave patterns for XRP based on key Fibonacci retracement levels, which could indicate future price movements and support zones:

• Shallow Correction: Predictions suggest a bottom between $1.90 and $2.10, aligning with the Fibonacci retracement golden ratio (0.5–0.618). The $1.90 mark coincides with significant support from subwaves 3 and 4 of Wave 1.
• Deeper Correction: A more substantial dip could see XRP fall to $1.63, corresponding with the 0.786 Fibonacci retracement level. This scenario aligns with a larger A-B-C wave pattern within subwave 2 of Wave 3, making $1.63 a critical support zone as it matches the previous high of subwave 5 from Wave 1.

If Bitcoin stabilizes, XRP's correction may be less severe. As of press time, BTC is experiencing a 4.7% drop, trading below $100K at $98,000 after a dip to $93,000 earlier today.