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XRP Price Climbs Higher, But Here’s Why the Rally Could Be A Trap

2 mins
Updated by Mohammad Shahid
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In Brief

  • XRP has gained 4% this week, fueled by improving altcoin sentiment, but on-chain data suggests a potential trap.
  • Exchange Net Position Change hit an 8-month high, signaling traders may be using the rally to exit, increasing downward pressure.
  • A break below key support at the ascending channel's lower line could trigger a drop to $2.14, with $2.35 as the upside target.
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Ripple’s XRP is up 4% over the past seven days, riding a wave of improving sentiment across the broader altcoin market. 

However, despite this upward momentum, key on-chain indicators suggest that the rally could soon lose steam as XRP holders rush to lock in profits.

XRP Is Up 4% This Week—But Traders Are Quietly Exiting the Market

Glassnode data reveals a steady uptick in XRP’s Exchange Net Position Change over the past week. On-chain data shows that this metric, which tracks the net amount of tokens moving onto centralized exchanges, rose to an eight-month high of 283 million XRP on July 7.

XRP: Exchange Net Position Change
XRP Exchange Net Position Change. Source: Glassnode

The timing is notable, as the spike in exchange inflows coincides with XRP’s recent price increase. This means that many traders appear to be using the rally as an opportunity to exit positions, exerting some downward pressure on the token.

Furthermore, despite XRP’s spike, its Chaikin Money Flow (CMF) has gradually trended downward, forming a negative divergence with the token’s price. As of this writing, this indicator is at 0.01, poised to break below the zero line.

The CMF indicator measures how money flows into and out of an asset. When its value is positive, it suggests high demand and upward price momentum. On the other hand, negative CMF readings point to strengthening selling pressure and rising bearish sentiment.

XRP CMF
XRP CMF. Source: TradingView

While XRP’s CMF has yet to fall below the zero line, its continued decline signals weakening accumulation. This trend often precedes a bearish reversal, and in XRP’s case, that outcome appears likely unless fresh demand enters the market to absorb the growing supply.

Losing This Support Could Spark a Drop to $2.14

On the daily chart, XRP is retesting the lower line of the ascending channel it has trended within over the past week.

This channel is formed when an asset’s price consistently makes higher highs and higher lows within two upward-sloping, parallel trendlines. The upper line acts as dynamic resistance, while the lower line serves as dynamic support. 

Therefore, when the price begins to test the lower boundary, especially after a strong rally, it often signals exhaustion in upward momentum. 

A decisive break below this lower support line is considered a bearish signal, as it suggests that buyers can no longer hold the trend. If this happens, XRP risks falling to $2.14.

XRP Price Analysis

XRP Price Analysis. Source: TradingView

However, if the bulls regain control and demand climbs, they could drive XRP’s price to $2.35.

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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Abiodun Oladokun
Abiodun Oladokun is a Technical and On-Chain Analyst at BeInCrypto, where he specializes in market reports on cryptocurrencies from diverse sectors, including decentralized finance (DeFi), real-world assets (RWA), artificial intelligence (AI), decentralized physical infrastructure networks (DePIN), Layer 2s, and meme coins. Previously, he conducted market analysis and technical assessments of various altcoins at AMBCrypto, utilizing on-chain analytics platforms like Messari, Santiment...
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