XRP Price Rises Ahead of RLUSD Launch, But Reversal Risks Remain

XRP has been one of the best-performing large-cap cryptocurrencies recently, continuing its upward trajectory with a 12% rise. The surge follows a bottoming out at $1.9065 on December 10, marking the start of a notable uptrend. The rally gained further momentum after Ripple CEO Brad Garlinghouse announced that the company would be launching its RLUSD stablecoin on December 17, 2024. The stablecoin will initially be available on prominent exchanges like Uphold, Bitstamp, and MoonPay.

The RLUSD launch follows successful regulatory approval from New York authorities, after months of scrutiny. Ripple aims for RLUSD to be a significant player in the stablecoin market, providing enterprise-grade solutions. Additionally, Ripple hopes RLUSD will complement XRP, contributing to cross-border transactions and enhancing XRP’s utility in global remittance markets.

However, despite the optimism surrounding RLUSD, significant risks remain. The biggest risk is that RLUSD may fail to gain traction among users, as seen with other stablecoins launched by major companies that didn’t achieve widespread adoption. For instance, USDD, launched by Justin Sun in 2022, has seen its market cap stagnate at around $740 million, while PayPal’s stablecoin (PayPal USD), launched in 2023, has struggled to grow, currently holding assets worth $458 million.

In contrast, Tether (USDT), the largest stablecoin, continues to grow, with its market cap surpassing $140 billion, making it the dominant player in the stablecoin market with a 66% market share.

Technical Risks for XRP Price

On the technical side, there are several risks that could lead to a price reversal for XRP. One such risk is the “sell the news” scenario, where XRP’s price has been driven up in anticipation of the RLUSD launch, only to experience a pullback once the event actually occurs. A similar pattern was observed with Bitcoin’s halving event in April, where the price rose beforehand but corrected after the event.

Additionally, a double-top pattern is emerging on the XRP price chart at the $2.90 level. A double-top is a bearish chart formation that typically signals a potential price pullback. If XRP hits the $2.90 level and faces resistance, it could retrace back to the $1.90 neckline, marking a potential reversal point.

Moreover, XRP is currently trading about 60% above its 50-day moving average, which increases the likelihood of a mean reversion, where the price might fall back towards the key moving averages in the short term.

Bullish Scenario for XRP

However, if XRP manages to break above the double-top resistance at $2.90, it could invalidate the bearish outlook. A successful breakout would likely propel the price toward the $5 level, opening up the possibility for further gains.

In summary, while the RLUSD launch provides a strong catalyst for XRP’s price rise, technical patterns and historical market behavior suggest that price corrections could be on the horizon. Investors should keep an eye on key price levels and be aware of potential market reactions to the news surrounding RLUSD.