Originally published on: December 06, 2024
XRP has seen a significant drop of nearly 18% since reaching its peak in December, leaving traders hopeful for a rebound. However, this optimism could be short-lived if Bitcoin dominance continues to climb, according to a crypto analyst.
Pav Hundal, the lead analyst at crypto exchange Swyftx, raised concerns about the potential risks for highly leveraged XRP bulls if Bitcoin dominance surges. He warned that a shift from XRP to Bitcoin could lead to a “bloodbath” of liquidations among traders.
Currently, Bitcoin dominance stands at 55.27%, a slight decrease from the previous week. Some traders predict that this number could rise to 60% or even 70% before a capital rotation into altcoins occurs.
Hundal noted a surge in retail buying activity in recent weeks, with open interest levels nearly double those seen in 2021. Despite the market enthusiasm for long XRP positions, Hundal cautioned that a sudden pullback could result in significant losses for traders.
At the time of writing, XRP was trading at $2.37. Hundal pointed out that even a modest 7% decline to $2.18 could wipe out $104.4 million in long positions.
With XRP experiencing a 431% rally following the US presidential election in November, its OI reached $3.44 billion on Dec. 5, surpassing previous levels seen in April 2021.
Hundal emphasized the need for caution in the current market environment, warning that the surge in XRP long positions may indicate a potential state of euphoria among investors.
As investors navigate the volatile crypto market, Hundal advised conducting thorough research before making any investment decisions. The article does not provide investment advice and encourages readers to exercise due diligence.
For more insights on market trends and investment opportunities, subscribe to the Markets Outlook newsletter for weekly updates on critical market developments and trading strategies. By subscribing, readers agree to the Terms of Services and Privacy Policy.