XRP surged 26.50% in the past 24 hours, reaching $1.95 on Nov. 30, its highest price since April 2021.

The rally has been fueled by rumors that the New York Department of Financial Services (NYDFS) might approve Ripple’s RLUSD stablecoin in December.

Despite this momentum, at least three indicators suggest XRP could face bullish exhaustion in the near term, potentially leading to a 20% correction from current levels.

The first indication of a potential price correction stems from XRP's ascending channel pattern.

On Nov. 30, XRP hit the resistance level of this channel, increasing the likelihood of a pullback, as has happened during previous interactions with this resistance.

Additionally, XRP’s relative strength index (RSI) on the 4-hour chart has exceeded 80, entering overbought territory.

Historically, RSI levels this high have often preceded price declines, signaling buyer fatigue.

A downward move could test support near $1.75, at the channel’s lower trendline, or around the 50-EMA at $1.48, representing a roughly 20% drop from current levels.

On-chain data also reveals declining whale activity.

Wallets holding at least 100,000 XRP reduced their balances as the token approached recent local highs.

Messari data shows that the supply held by these large addresses peaked at 90.73 billion XRP on Nov. 24 before decreasing by 30 million XRP, suggesting some whales are selling at multi-year highs.

This decline in whale holdings aligns with XRP nearing resistance at $1.90, reinforcing the possibility of a downside scenario and a 20% price drop in December.

In the derivatives market, XRP open interest (OI) has surged 37% over the past 24 hours to a record $3.19 billion, reflecting increased speculative activity.

JA Maartun, an analyst at CryptoQuant, pointed out that this rise in OI mirrors a pattern observed before a 17% drop in XRP between Nov. 23 and 26, attributing the surge to a “leverage-driven pump” that could result in long liquidations.

Leveraged positions have specific liquidation prices, where a trader’s collateral becomes insufficient to cover losses, leading to automatic liquidation by the exchange.

If XRP experiences a rapid price decline, over-leveraged traders could face simultaneous liquidations, increasing sell pressure and accelerating the price drop.

Sources:

https://cointelegraph.com/news/xrp-price-43-month-highs-rally-over-now

https://x.com/JA_Maartun/status/1862537501400822085