XRP price drop after Trump’s inauguration signals profit-taking

The anticipation surrounding Donald Trump’s inauguration has generated great enthusiasm within the XRP community, with many speculating that prices will rise after the inauguration. Investors were optimistic that the new administration would bring favorable regulatory policies, pushing XRP and other digital assets to new highs.

XRP saw a rise ahead of the inauguration, as its price rose steadily amid increased activity of large investors; whales bought more than 100 million XRP in 48 hours ahead of January 20.

However, the rally failed to maintain momentum. After the inauguration, the price of XRP dropped 4.82% within a day to trade at $3.13.

This decline reflects a broader decline in the cryptocurrency market, where MME currencies, including the Trump and Melanie tokens, saw sharper declines as the meme sector fell by around 15% by January 21.

The sale suggests that the market may have overestimated the potential impact of the installation on cryptocurrency valuations.

The post-installation decline in the XRP price suggests that many investors took advantage of the pre-inauguration rally to secure profits. Short-term traders are likely to contribute to the sale, resulting in a sharp drop in price despite strong whale activity ahead of January 20.

XRP now has a market capitalization of $180.08 billion, while its 24-hour trading volume has decreased by 23%, indicating reduced market enthusiasm. Volatility reflects the cyclical nature of speculative markets, with rallies often leading to quick profit-taking, especially after high-profile events such as the inauguration.

The rebound may signal a return to the highs seen earlier this month while the ongoing sell-off may lead to further declines. For investors, watching these trends closely will be crucial in deciphering XRP’s future trajectory.

Increasing selling pressure pressures XRP price towards support

The recent decline in the price of XRP is primarily due to traders securing profits after the peak of the cryptocurrency. Data from Santiment shows that net profit/loss realized on the network (NPL) has reported steady positive figures over the past week, suggesting that more investors are pulling their money out of losses.

This metric plays a crucial role in understanding market dynamics, as it helps measure the profit margins of traders selling their assets. Net profit/loss realized on the network indicates strong selling activity, which contributes to an increase in supply in the market, which inevitably leads to lower prices in the absence of sufficient demand.

Moreover, the increase in the stock of XRP’s flow on the exchange, which has risen by 105% since January 17, provides further evidence of increasing selling pressure. This metric depicts XRP’s net entry and exit on exchanges and serves as a strong indicator of market intent.

Exchange Flow Movement: Understanding Market Sentiment

A high exchange flow balance indicates that more XRP tokens are deposited on exchanges, indicating that traders are taking a sell position. According to Santiment, this trend is closely aligned with recent XRP price movements, reflecting bearish sentiment that could put more pressure on its valuation.

This bearish momentum could push XRP towards the next important support level at around $2.45, especially if profit-taking continues unabated. If this happens, it will be necessary for traders to watch for signals indicating a return of buying pressure to the market.

XRP continues to navigate through a volatile landscape characterized by profit taking, volatile price levels, and market sentiment. As the cryptocurrency approaches critical support, traders’ actions in the coming weeks will be pivotal.

What awaits XRP?

Despite the current decline, XRP holds the potential for recovery in the coming months, with speculation about the launch of the XRP exchange-traded fund (ETF) fueling optimism among investors as it could attract significant institutional interest.

In addition, the recent change in leadership at the SEC may pave the way for more favorable regulatory policies. Interim President Mark Ueda’s stance on innovation and more nuanced guidelines for cryptocurrencies could provide long-awaited clarity in the market. The sale suggests that the market may have overestimated the potential impact of the installation on cryptocurrency valuations.

Another crucial factor is the ongoing Ripple vs. SEC case, which investors are watching closely in the hope that it will be rejected under the new administration. A positive result would boost the price of XRP and strengthen its position within the cryptocurrency market.

As XRP goes through this transition period, its future depends on regulatory developments, market dynamics, and resolving its legal battles. While short-term volatility may persist, the long-term outlook for the currency remains tied to critical milestones that may redefine its course.

XRP Price Forecast: $2.45 Critical Level

XRP is currently trading at around $3.09, which is at a pivotal moment. If the current selling trend continues, prices could fall towards critical support at $2.45. Analysts note that this level is important because it historically serves as a strong support point where buying interest usually appears.

Conversely, if the prevailing profit-taking trend can be curbed, there is still a reasonable chance for XRP to regain its all-time highs. This scenario largely depends on the general market conditions and the willingness of investors to absorb incoming supply without much resistance.