XRP whales enter $170M selling spree as SEC fines Ripple $2B
XRP price fell below $0.57 on April 3 amid the global crypto market dip, but an unusual selling trend observed among whale investors threatens to further exacerbate the downtrend.
Ripple-backed XRP has faced intense price volatility over the past week amid long-running legal battles with regulators. On-chain data trends provide insights into the main bearish catalysts, and how XRP prices could react in the days ahead.
Whale investors cut holdings to 30-day low following SEC fine
On March 25, Ripple CEO, Brad Garlinghouse revealed that the team is expecting the US Securities and Exchange Commission (SEC) is seeking to impose a $1.95 billion on Ripple. This came after the agency prevailed on some of its claims about Ripple’s illegal sale of securities through directly selling its XRP Coin to institutional investors.
The SEC filed officially filed the motion under seal in a US District court on Friday, sending the XRP community into a speculation frenzy, as traders looked to front-run the potential impact of the fines.
Ripple CEO assured the community that the company is well-positioned to pay the fines. But looking beyond the headlines, on-chain data shows that whale investors and corporate entities holding atleast 1 million XRP (~$580,000) did not share that optimism.
The Santiment chart below tracks whale investors’ wallet balances in real-time, providing insights into their current sentiment and trading activity.
After the SEC officially filed the $2 billion fine motion on Friday, March 29, XRP whale investors instantly entered a selling spree. As seen in the chart above, they have offloaded over 290 million coins between March 29 and April 3, cutting their balances down to a 30-day low of 44.9 billion at the time of writing.
Valued at the current prices, the recently traded 290 million XRP coins are worth approximately $170 million. Flooding the markets with such a large volume of coins is likely to put downward pressure on prices. Unsurprisingly, XRP price has tumbled 13% since the whales sell-off began in March 29.
Strategic retail swing traders may be unwilling to go against deep-pocketed whales with over 44.9 billion XRP holdings. If the small-hold retail traders take on a bearish positions as well, XRP price could struggle to enter a major rebound phase in the days ahead.
XRP speculative traders fear the bearish trend will linger
Furthermore, recent trends observed in the derivatives markets also shows that speculative bull traders have displayed low optimism on XRP short-term price prospects.
Coinglass’ funding rate metric tracks the percentage fees paid between long traders and short position holders in the perpetual futures markets. It essentially tracks the direction of investors sentiment and market participation.
At the time of writing on April 3, XRP price is trading just below $0.58, while funding rate has dropped to 0.013%, its lowest in 10 days. Typically, a decline in funding rate signals a growing negative sentiment among bull traders betting on a price increase.
If the bull traders begin to cut down on their long positions, it puts XRP price at risk of further downswide in the days ahead.
XRP price forecast: Possible downswing toward $0.55
The whale investors’ $170 million sell-off and the declining funding rates suggest that XRP price could be on the verge of a major price downswing below $0.55 in the days ahead.
After 11.7% decline from March 29, XRP price has now fallen below the 20-day simple moving average price, and is hanging precariously above the lower-limit Bollinger band indicator at $0.58.
If that critical support buy-wall caves, the bears could seize the momentum to force a larger reversal below $0.55 as predicted.
On the flip side, the bulls could regain foothold in the markets if XRP price break above the $0.62 area. Although, this currently seems unlikely, considering the dominant selling preference among whale investors.
