XRP whales are cashing in after the 200% breakout

• XRP’s rally was triggered by Ripple’s drive to become a CBDC infrastructure provider.
• The token is grossly overbought and vulnerable to a downward correction.

Ripple’s XRP has been on fire recently. The price of the third largest digital asset started gaining ground on November 20 and reached a new multi-year high at $ 0.7870 on November 24. Despite the subsequent pullback, XRP is still trading up 35% from now on Monday. Week after week, the token more than doubled in value.

Notably, Ripple’s market value reached $ 28 billion, while its average daily trading volume catapulted to $ 30 billion from $ 6 billion on November 20 before the rally.

Brad Garlinghouse has his eye on CBDC

From a fundamental point of view, XRP owes its growth to a combination of factors, including the report that Ripple stopped selling XRP and started buying them.

However, comments from Brad Garlinghouse, CEO of Ripple Labs, during a recent podcast interview with The Scoop were the critical event that initiated the bullish trend. Ripple’s CEO suggested global central banks could use XRP Ledger to issue state-backed stablecoins. He also noted that XRP was ideal for linking various currencies.

Of course, his words match the shares as the company posted a job offer for a senior director of central bank commitments. He or she will be responsible for partnerships and project work with global central banks with the primary focus on central bank digital currency (CBDC) initiatives on XRP Ledger.

In this role, you will define and guide Ripple’s strategy with central banks, build relationships and educate central bankers around the world. The crucial role will also be securing and managing partnerships with central banks to build and implement projects.

It is unclear whether Ripple’s has already been involved in some CBDC developments; however, the company is obviously moving in that direction.

What goes up must come down and XRP is no different

XRP was inactive for most of the year and did not participate in market rallies. No wonder this sudden price hike inspired Ripple’s bulls and built a wall of optimism about Ripple’s future.

However, exaggerated price spikes often result in sharp downward corrections as the market has to find a new equilibrium before going any further. Now on-chain metrics imply that both speculators and long-term holders are rushing to cash out their coins after the price jump.

The age of XRP is worn out

The Age Consumed metric, calculated by behavioral analytics firm Santiment, increased on Nov.24, signaling that a large number of tokens moved after being inactive for a long time. Usually, this indicates an impending growth in volatility.

Although the Age Consumed metric helps predict abrupt market movements, it says nothing about the direction of price movement.

Traders send XRP to exchanges

XRP foreign exchange inflows have increased significantly since Saturday. According to Phillip Gradwell, chief economist at Chainanalysis, 2.3 billion XRP tokens were sent to different exchanges, a 300% increase from the average daily inflow over the past year.

Holders usually move their coins to exchanges when they are ready to sell them. Otherwise, they prefer to keep them in cold wallets. Coupled with the Age Consumed metric, this data implies that XRP is on the verge of a catastrophic landfill.

XRP price prediction

From a technical point of view, the TD Sequential Indicator printed a sell signal in the form of a green nine-hour candle on the XRP 4 and 12 hour charts. The increased selling pressure for XRP could see it drop from one to four candles per day. But if the bearish pressure is strong enough, the token could start a new countdown.

XRP / USD, 4 and 12 hour charts

Local support is created by the intraday lows of $ 0.56 and $ 0.5. This barrier served as resistance during the recent rally and can now be verified as a support level. Once out of the way, the 12-hour SMA50 at $ 0.38 will be in focus. However, the most crucial area is $ 0.3150 as it halted the recovery in August and slowed the bulls during the November rally. A sustainable move below this area will invalidate the bullish forecast for XRP.

XRP / USD 12-hour chart

On the upside, the first bullish target is $ 0.70. Above this level, the upside is likely to take hold, with the next focus on the recent high of $ 0.78.