XRP experienced a significant 18% decline after reaching its yearly high on December 3. Despite this drop, traders remain optimistic about a potential rebound. However, analysts caution that rising Bitcoin dominance could challenge this optimism.
Bitcoin Dominance Threatens XRP Bulls
Pav Hundal, an analyst from crypto exchange Swyftx, warned that Bitcoin’s increasing dominance poses a threat to heavily leveraged XRP bulls. He highlighted that a shift from XRP to Bitcoin could trigger massive liquidations. Bitcoin’s market capitalization currently stands at $1.94 trillion, with its price around $98,278, according to CoinMarketCap.
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Traders speculate that Bitcoin’s dominance might rise to 60%-70% before capital rotates into altcoins. Hundal noted a surge in retail purchases in recent weeks, with open interest doubling compared to 2021 levels. This reflects a growing appetite for leveraged positions, even during price drops.
XRP’s Recent Price Performance
XRP is currently trading at $2.26, marking a 5.8% decrease in the past 24 hours. The market shows signs of nearing a euphoric state, as XRP’s price remained in a narrow range of $0.48-$0.73 for most of the year.
Source: CoinMarketCap
A turning point came after Donald Trump’s election victory on November 5, sparking a 431% rally that pushed XRP’s price to $2.85 on December 3.
Related article: XRP’s Bullish Comeback: Strong Support and New Targets in Sight
Data from cryptocurrency futures platforms reveals that XRP’s Open Interest (OI) reached $3.44 billion on Thursday, up from $2 billion in April 2021 during a similar rally. The XRP/BTC ratio climbed to 0.00002375, increasing 2.72% since December 5 and 47.6% over the past month.
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Hundal emphasized that Bitcoin stability could ease market concerns and revive spot trading volumes. While it faces challenges, traders remain hopeful for a strong recovery.