Ripple's XRP eyes massive rally after posting bullish flag, high profit-taking poses threat
- XRP investors realized nearly $800 million in profits on Wednesday following its recent 20% rise.
- Options traders are preparing for the possibility of XRP reaching the $5 mark.
- XRP could rally as high as $4.75 if it breaks above the upper boundary of a flag channel.
Ripple's XRP continued its rally on Wednesday as it looks to test the upper boundary of a key flag channel. Following the recent price rise, investors booked profits worth nearly $800 million while options traders bet on the remittance-based token hitting the $5 mark.
XRP options suggest bullish momentum amid profit-taking among investors
XRP has surged over 20% since Tuesday after Ripple announced it received approval to launch its RLUSD stablecoin. Since recovering from the dip just below $2, investors have booked nearly $800 million in profits. This developing trend of high profit-taking upon any major price rise could slow down XRP's bullish momentum.
 [00.10.41, 12 Dec, 2024]-638695557793479247.png)
XRP Network Realized Profit/Loss | Santiment
Additionaly, XRP's weekly active addresses have also begun to taper off, declining from 496K last week to 341K on Wednesday. This signals lesser on-chain activity and investor interest for XRP.
 [00.10.49, 12 Dec, 2024]-638695558169591423.png)
XRP Weekly Active Addresses | Santiment
Meanwhile, the XRP options market shows that traders favor an upside move, with the $5 call being the second-most traded XRP option, according to Amberdata, CoinDesk reported.
The $5 call on options exchange Deribit also hosts a notional open interest of $1.25 million — the highest among out-of-the-money calls. Out-of-the-money calls are option contracts with a higher strike price than the underlying asset's market price.
Ripple's XRP bull flag signals rally toward $4.75
XRP is posting a bull flag following its recent consolidation in the past few days.
This pattern is formed by a sharp price increase known as the flagpole, followed by a consolidation that resembles a flag before a breakout occurs.
XRP/USDT daily chart
If XRP sustains a high volume above the upper boundary of the flag channel, it could signify the continuation of its rally with a maximum profit target near $4.75. However, it must first overcome the resistance near the $3.00 psychological level to complete such a move.
The Relative Strength Index and Stochastic Oscillator momentum indicators are above their neutral levels and trending upward, indicating dominant bullish sentiment.
A daily candlestick close below $1.35 will invalidate the thesis and send XRP toward $0.93.
Ripple FAQs
Ripple is a payments company that specializes in cross-border remittance. The company does this by leveraging blockchain technology. RippleNet is a network used for payments transfer created by Ripple Labs Inc. and is open to financial institutions worldwide. The company also leverages the XRP token.
XRP is the native token of the decentralized blockchain XRPLedger. The token is used by Ripple Labs to facilitate transactions on the XRPLedger, helping financial institutions transfer value in a borderless manner. XRP therefore facilitates trustless and instant payments on the XRPLedger chain, helping financial firms save on the cost of transacting worldwide.
XRPLedger is based on a distributed ledger technology and the blockchain using XRP to power transactions. The ledger is different from other blockchains as it has a built-in inflammatory protocol that helps fight spam and distributed denial-of-service (DDOS) attacks. The XRPL is maintained by a peer-to-peer network known as the global XRP Ledger community.
XRP uses the interledger standard. This is a blockchain protocol that aids payments across different networks. For instance, XRP’s blockchain can connect the ledgers of two or more banks. This effectively removes intermediaries and the need for centralization in the system. XRP acts as the native token of the XRPLedger blockchain engineered by Jed McCaleb, Arthur Britto and David Schwartz.
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