- XRP investors realized nearly $800 million in profits on Wednesday following its recent 20% rise.
- Options traders are preparing for the possibility of XRP reaching the $5 mark.
- XRP could rally as high as $4.75 if it breaks above the upper boundary of a flag channel.
Ripple's XRP continued its rally on Wednesday as it looks to test the upper boundary of a key flag channel. Following the recent price rise, investors booked profits worth nearly $800 million while options traders bet on the remittance-based token hitting the $5 mark.
XRP options suggest bullish momentum amid profit-taking among investors
XRP has surged over 20% since Tuesday after Ripple announced it received approval to launch its RLUSD stablecoin. Since recovering from the dip just below $2, investors have booked nearly $800 million in profits. This developing trend of high profit-taking upon any major price rise could slow down XRP's bullish momentum.
 [00.10.41, 12 Dec, 2024]-638695557793479247.png)
XRP Network Realized Profit/Loss | Santiment
Additionaly, XRP's weekly active addresses have also begun to taper off, declining from 496K last week to 341K on Wednesday. This signals lesser on-chain activity and investor interest for XRP.
 [00.10.49, 12 Dec, 2024]-638695558169591423.png)
XRP Weekly Active Addresses | Santiment
Meanwhile, the XRP options market shows that traders favor an upside move, with the $5 call being the second-most traded XRP option, according to Amberdata, CoinDesk reported.
The $5 call on options exchange Deribit also hosts a notional open interest of $1.25 million — the highest among out-of-the-money calls. Out-of-the-money calls are option contracts with a higher strike price than the underlying asset's market price.
Ripple's XRP bull flag signals rally toward $4.75
XRP is posting a bull flag following its recent consolidation in the past few days.
This pattern is formed by a sharp price increase known as the flagpole, followed by a consolidation that resembles a flag before a breakout occurs.
XRP/USDT daily chart
If XRP sustains a high volume above the upper boundary of the flag channel, it could signify the continuation of its rally with a maximum profit target near $4.75. However, it must first overcome the resistance near the $3.00 psychological level to complete such a move.
The Relative Strength Index and Stochastic Oscillator momentum indicators are above their neutral levels and trending upward, indicating dominant bullish sentiment.
A daily candlestick close below $1.35 will invalidate the thesis and send XRP toward $0.93.
Cryptocurrency metrics FAQs
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value.
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
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