XRP Plummets 46% From All-Time High, Short-Term Holders Capitulate

XRP, a prominent cryptocurrency, has experienced a significant downturn, losing 46% of its value since reaching an all-time high of $3.40 on January 16. This decline has pushed many holders, particularly short-term investors, into losses, raising concerns about further downside. However, recent on-chain data suggests a potential shift in market sentiment.

According to the Short-Term Holder Net Unrealized Profit/Loss (STH-NUPL) metric, capitulation among short-term holders is underway. Short-term holders are defined as those who have held their assets for less than 155 days. This group is experiencing capitulation, selling their assets at a loss, often driven by panic or exhaustion. At the time of reporting, XRP’s STH-NUPL reached its year-to-date low of -0.13, indicating that many short-term holders are recording their highest unrealized losses of the year. This situation could potentially worsen the downward pressure on the token’s price.

Historically, such capitulation events have been observed near market bottoms and can signal a bullish reversal. This suggests that "weak hands" are exiting the market, making way for "diamond hands" that could trigger a bullish trend reversal. XRP’s nearly oversold state supports this positive outlook. The altcoin’s Relative Strength Index (RSI) is poised to fall below 30, a level typically marked by sellers’ exhaustion. The RSI indicator measures an asset’s overbought and oversold market conditions, ranging between 0 and 100. Values above 70 suggest that the asset is overbought and due for a price decline, while values under 30 indicate that the asset is oversold and may witness a rebound. Once XRP becomes oversold, its sellers experience exhaustion, creating a buying opportunity for those looking to accumulate the currently undervalued altcoin.

On the daily chart, XRP remains within its descending parallel channel, a bearish signal that has been in place since January 16. This channel indicates a sustained downtrend with lower highs and lower lows, signaling continued bearish momentum in the XRP market. However, if new demand enters the market once XRP becomes oversold, it could prompt a rebound toward $1.89. This scenario highlights the potential for a market bottom and a subsequent bullish reversal, as short-term holders capitulate and new buyers enter the market.