The recent performance of XRP has left many traders on edge as the coin faces increased selling pressure, a situation exacerbated by a significant jump in exchange inflows. CryptoQuant analyst Darkfost (@Darkfost_Coc) highlights that the current setup indicates a market that has not yet transitioned into accumulation, but instead continues to contend with selling pressures.
XRP Selling Pressure Intensifies
Darkfost has noted key indicators pointing to an intensification of selling pressure on XRP amid a sharp price drawdown. He referenced a dramatic price correction that has seen XRP plummet by roughly 50%, from a previous high close to $3.66 down to approximately $1.85. The analyst considers this fluctuation to be indicative of current market sentiment.
Central to Darkfost’s analysis is the observation of exchange inflows, particularly from Binance—the leading exchange in terms of trading volume. He argues that increased inflows often signify an intent to sell, especially when such inflows rise rapidly. As per his recent posts, Darkfost visualizes this heightened selling activity by closely monitoring XRP inflows to Binance.
He noted a transition beginning mid-December, where inflows shifted from stable to notably high. On December 19, inflows spiked to an impressive 116 million XRP, underscoring the significant turnaround in market behavior.
Darkfost elaborates that this surge should not be seen as mere volatility but as a continuous trend of distribution rather than a clean washout. The sustained period of elevated inflows during this ongoing drawdown suggests that investor sentiment is leaning towards profit-taking and loss-cutting responses rather than constructive accumulation.
The Macro Backdrop
Examining the broader landscape, Darkfost connects the current XRP dynamics to a persisting liquidity squeeze in the crypto market. He notes that the market capitalization of leading stablecoins has stagnated recently, creating a challenging environment for price recovery. This lack of incoming liquidity (fiat to crypto) raises concerns about the overall demand within the market, despite liquidity remaining available but sidelined.
To underscore this point, Darkfost quantified the trend: average monthly inflows to exchanges have halved since September, declining from $136 billion to around $70 billion. This drop not only reveals liquidity constraints but also necessitates caution as the annual average continues its downward trajectory.
As market sentiment begins to shift into bearish territory, Darkfost noted a consensus forming among traders that signals a potential reversal point. Drawing on his sentiment tracking, he indicated that general market sentiment is now tentatively negative, which could pave the way for potential turnaround scenarios—although caution remains crucial in the current environment.
He added a warning regarding the timing of market movements, emphasizing that overarching macroeconomic conditions might prolong bearish phases. Currently, with XRP trading at about $1.90, stakeholders must remain vigilant as these market dynamics unfold.
In conclusion, traders should closely monitor the inflow trends to gauge investor sentiment and consider broader liquidity factors before making significant decisions. As XRP navigates through this turbulent phase, understanding the signals from on-chain data may provide essential insights into the potential future course of the cryptocurrency.
