XRP is experiencing a leverage-driven rally – what that means for price

XRP has risen above $1.62, less than 5% away from the crucial $2 mark. This impressive rally has seen the price rise over 50% since last Tuesday, attracting the attention of investors and analysts. The bullish momentum suggests that the price could continue its upward trend, driven by growing optimism and strong market sentiment. However, such quick gains also come with potential risks, especially in volatile conditions.

CryptoQuant analyst Maartunn has highlighted key insights that suggest XRP’s recent rise may be due to leveraged positions rather than organic demand. A Lever driven pump indicates increased speculative activity, which could lead to sharp corrections if momentum weakens. As price approaches multi-year highs, market participants must navigate this scenario cautiously, balancing enthusiasm with awareness of possible downside risks.

The coming days will be crucial for XRP as it approaches the psychological $2 mark. A successful break of this level could strengthen the bullish case and set the stage for new highs. Conversely, failure to maintain current levels could lead to increased volatility and retracement. Currently, it remains one of the most watched assets in the crypto market and all eyes are on its next move.

Can XRP bulls maintain this pace?

XRP’s meteoric rise, which rose over 285% in less than 30 days, has sparked debate among investors. Many are wondering whether the current pace can be sustained by the high demand required to keep driving prices up. While the rally has reignited optimism in the market, skeptics suggest it could either lead to a parabolic bull run or serve as an exit liquidity strategy for whales.

In the crypto space Exit from liquidity refers to retail investors buying into a rapidly growing asset, often driven by hype that allows early investors or whales to sell their holdings at higher prices. This concept raises concerns about the sustainability of the XRP rally, especially if organic demand cannot keep up with speculative momentum.

Maartunn shared a fascinating perspective on XRP’s recent performance. He analyzed the price action along with the Open Interest (OI) data and described the rally as “ Lever driven pump. OI has increased by 37% during this period, indicating a significant increase in leveraged trading activity.

While leverage can increase profits, it also increases volatility and risk. Maartunn noted that a similar event in the past triggered a 17% decline and warned investors to remain cautious.

As XRP approaches key psychological levels, the next steps will be crucial. Investors must weigh the potential for further growth against the risks of increased leverage and possible whale-induced selloffs.

Price Action: Key Levels to Watch

XRP is trading at $1.92, breaking the critical resistance level at $1.60 and continuing its streak of new highs. The price is now approaching the previous cycle high at $1.96, a level that holds significant psychological and technical significance. This dynamic has sparked optimism among investors, who see the $2 mark as confirmation of XRP’s long-term bullish structure.

A breakout above $2 would solidify bullish sentiment and mark a crucial milestone in XRP’s ongoing rally. Such a move could pave the way for even higher price targets as market confidence increases. However, traders remain cautious about the possibility of a retracement. If XRP fails to sustain gains above $2, a correction could see prices fall back to key support levels, particularly around $1.60, where significant demand was observed.

The next few days will be crucial in determining whether the price can maintain its uptrend or face a temporary decline. As the asset approaches its key $2 mark, investors should keep an eye on trading volume and market sentiment, which will likely determine XRP’s direction in the near term.

Featured image by Dall-E, chart by TradingView