XRP has struggled to sustain upward attempts in recent trading sessions. The token managed to rise last week but is currently experiencing some bearish development.
The driving factor is short-term selling combined with underlying skepticism among investors, which could intensify if market conditions deteriorate.
XRP is back in the black
On-chain data shows that around 83% of XRP's circulating supply is once again profitable. This proportion briefly rose to 85% over the past day before slightly declining. The level marks the highest in one and a half months, indicating broad profitability among holders.
Want more such token insights? Sign up for editor Harsh Notariya's daily crypto newsletter here.
Increasing profitability often changes investor behavior. When a large portion of the supply becomes profitable, selling pressure typically rises. Many choose to take profits, especially after a prolonged consolidation period. This dynamic creates resistance for XRP as supply pressure builds up near resistance levels.
XRP holders remain loyal to their core
Short-term traders appear to be acting on these incentives. Wallets that have accumulated XRP over the past week and month have notably reduced their holdings. Their share of the supply dropped from 5.7% to 4.9% over seven days.
These investors are among the most reactive market participants. They often sell quickly as soon as positions become profitable. The ongoing decline in short-term traders' balances indicates continued distribution, which may persist if the price attempts to push higher without stronger demand.
Such trends limit further upside. When short-term traders dominate selling, upward momentum often fades quickly. XRP therefore faces the challenge of absorbing this supply without triggering deeper retracements.
Overall sentiment remains concerning
Macroeconomic indicators reinforce the cautious picture. Data on changes in exchange reserves show that outflows have remained active for XRP. Even though outflows have recently slowed slightly, inflows have never managed to catch up.
This imbalance suggests sellers still hold influence. If inflows to exchanges increase again, selling pressure may intensify. XRP's structure remains vulnerable under such conditions, particularly if market sentiment weakens or volatility increases.
Persistent exchange activity often precedes price corrections. Without a clear shift toward accumulation, XRP may struggle to establish higher support levels in the short term.
XRP price may repeat history
XRP is trading near $2.25 at the time of writing, just below resistance at $2.36. The Money Flow Index indicates overbought conditions. This metric combines price and volume to assess buying and selling pressure.
With MFI above the 80.0 threshold, historical patterns suggest increased risk of correction. Even if XRP remains short-term, the price could fall below $2.19. A deeper drop could test $1.80, a support level previously confirmed in earlier retracements.
The bearish outlook will change if selling slows. If investors stop selling, XRP could rise from $2.19. A clear break above $2.36 could open the door for a move toward $2.64, thereby invalidating the bearish scenario.