XRP Price Reaches $3 But The Rally May Not Sustain

XRP surges past $3.00, sparking investor excitement, but underlying market indicators suggest the rally may be fragile. Network growth and profit metrics hint at potential challenges for sustained price momentum.

XRP has climbed over $3.00, sparking renewed investor optimism, but underlying market indicators suggest the rally may be short-lived and vulnerable to a potential pullback.

The cryptocurrency's recent price surge comes with significant warning signs. Network growth has fallen to its lowest point in six weeks, highlighting a critical slowdown in new investor participation. This decline in fresh addresses joining the network undermines the sustainability of XRP's current price momentum.

Even more concerning is the supply in profit, which has surged to 95% - a level historically associated with market tops. When such a high percentage of tokens are in profit, investors often seek to secure gains, creating substantial selling pressure across exchanges. This profit saturation leaves XRP particularly vulnerable to a potential correction.

Chart by TradingView

XRP Technical Analysis

Technically, XRP faces significant resistance at $3.35, with $2.95 serving as a critical support level. Breaking through the resistance will be challenging as bears attempt to defend overhead barriers while bulls try to maintain current price levels.

The current market setup suggests XRP may struggle to extend its rally. If selling pressure increases, the token could fall back to $2.95, testing investor confidence and limiting upward growth potential. However, a bullish scenario remains possible if HODL behavior dominates and the price can breach $3.35, potentially driving toward $3.66.

Looking Ahead: Analysts caution that the combination of waning network growth and high profit percentages creates a precarious environment for a continuation of the price increase. The market appears to be at an inflection point, with multiple factors suggesting increased volatility ahead.