XRP May See Further Downside as Holders and Institutions Pull Back

• Long-term holders realized $721.5 million in profits on December 11, 2024, signaling waning confidence.

• Institutional ETF buying volume plummeted 96.49% from November to December 16, 2024.

• XRP exchange reserves reached 2.66 billion tokens, increasing sell-off risks if demand doesn’t rebound.

XRP price drops below $2 amid bearish signals from holders and institutions. Explore factors driving this reversal and future outlook for the cryptocurrency in 2025. Stay informed on market shifts today.

What is causing XRP’s recent price decline below $2?

XRP’s price decline below $2 in December 2024 follows a prolonged bullish run that saw it reach an all-time high of $3.68 after breaking into the $2 region in November 2024. This reversal highlights growing bearish dominance driven by profit-taking from long-term holders and retreating institutional interest. Data from on-chain analytics indicates that these factors have eroded the altcoin’s upward momentum over the past month.

How are long-term holders influencing XRP’s bearish momentum?

Long-term holders, defined as addresses holding XRP for over 155 days without transactions, have shown fading conviction in the asset’s future. On December 11, 2024, holders aged five to seven years realized approximately $721.5 million in profits, with XRP trading near $2.03 against an average cost basis of $0.40, according to Glassnode data. This significant profit-taking, amid a wide gap between acquisition costs and market prices, suggests a lack of belief in sustained upside potential.

Source: Glassnode

Such actions by veteran investors often precede broader market shifts. Additionally, Ripple Co-Founder Chris Larsen sold over 200 million XRP earlier in 2024, further amplifying concerns about the altcoin’s long-term narrative. As these holders exit, the available supply on exchanges has increased, putting downward pressure on the price.

The retreat isn’t isolated to individual holders. Institutional investors, a key driver of XRP’s earlier gains, have also pulled back significantly. U.S. XRP spot exchange-traded funds (ETFs) saw buying volume drop from $246.05 million in November 2024 to just $8.54 million by December 16, 2024—a stark 96.49% decline, as reported by CoinGlass. This sharp reduction in inflows reflects deteriorating sentiment among traditional finance players entering the crypto space.

Source: CoinGlass

Bearish pressures extend beyond institutions to the overall market dynamics. XRP exchange reserves have climbed to 2.66 billion tokens, making more supply available for potential sell-offs. Should this reserved supply flood the market, XRP could face further declines below its current level near $1.88. Notably, institutional outflows preceded retail selling, with smaller traders reacting to the initial exits by long-term holders. If this trend continues, the downside risks may intensify, potentially testing lower support levels.

While these factors contribute to the bearish outlook, whale activity—movements by large holders capable of swaying prices—has remained subdued. The whale-to-exchange flow metric, tracking transfers between whale wallets and exchanges, has hit zero, per CryptoQuant data. This inactivity marks a departure from the more dynamic period between July and October 2024.

Source: CryptoQuant

The most recent whale movement was on October 25, 2024, after which XRP dropped from $2.6 to $2.2. Historical patterns show that renewed whale activity could exacerbate downside risks. However, spot market indicators reveal persistent taker buy volume, providing some short-term stabilization. This balance between selling pressure and underlying demand will be crucial in determining XRP’s trajectory.

Market analysts from firms like Glassnode emphasize that such shifts often signal a broader confidence reset in volatile assets like XRP. “Profit-taking after extended rallies is a natural market correction,” notes an expert from on-chain analysis platforms. As XRP navigates this phase, monitoring holder behavior and institutional flows remains essential for gauging recovery potential.

Frequently Asked Questions

What factors are driving XRP’s price decline in December 2024?

XRP’s price decline below $2 in December 2024 is primarily driven by profit-taking from long-term holders realizing $721.5 million and a 96.49% drop in institutional ETF buying volume. Rising exchange reserves to 2.66 billion tokens add to sell-off pressures, while whale inactivity limits immediate support.

Will XRP recover from its current bearish momentum?

XRP’s recovery from bearish momentum depends on renewed institutional inflows and stable holder sentiment. Current data shows spot buying providing short-term support, but sustained demand is needed to counter rising reserves and prevent further drops below $1.88, as observed in recent market trends.

Key Takeaways

• Profit-taking by long-term holders: Realized gains of $721.5 million indicate reduced conviction after XRP’s rally to $3.68.
• Institutional retreat: A 96% decline in ETF volumes signals waning traditional investor interest, amplifying bearish pressure.
• Monitor whale activity: Zero flows suggest stability now, but any resumption could accelerate downside risks.

Conclusion

XRP’s price decline below $2 and emerging bearish momentum reflect a confluence of long-term holder exits, institutional pullbacks, and elevated exchange reserves, marking a shift from its bullish dominance since November 2024. As the market digests these developments, fresh demand could stabilize the altcoin, but ongoing vigilance on on-chain metrics is advised. Investors should track these indicators closely for potential recovery signals in the coming months.