After an explosive rally that pushed XRP close to the $3 mark, the token has seen a sharp pullback, falling nearly 50% to $2.31. While some traders hoped for a continuation of the uptrend, on-chain data suggests that large holders (whales) are taking profits at an unprecedented rate. Could this be a warning sign for further declines, or is it just a temporary consolidation before another leg up?

Whale Activity Signals a Distribution Phase

Data from CryptoQuant reveals that XRP whales have been offloading massive amounts of the token, aligning with what analysts call a distribution phase—a period when large investors cash out their profits near the peak of a rally.

Analyst JA Maartunn noted that whale flow indicators have hit an all-time low, suggesting that big players are exiting at a record pace. Binance reserves of XRP have also surged from 2.72 billion to 2.90 billion, further confirming increased selling pressure.

Is a Deeper Pullback Ahead?

Despite the correction, some analysts believe XRP could still have bullish potential. Dami DeFi pointed out that XRP is consolidating below a key resistance level and an ascending trendline. If it breaks out above resistance, a new price discovery phase could begin, fueled by speculation surrounding Trump’s support for XRP as part of a U.S. crypto reserve.

However, Bitcoin advocate Matt C takes a different view, arguing that XRP’s recent surge was merely an exit liquidity event for whales. He pointed to the relative strength index (RSI) forming lower highs, which often signals weakening momentum. According to him, the smart move now would be to sell XRP and rotate into Bitcoin.

Regulatory Uncertainty Weighs on XRP

Another factor impacting sentiment is the ongoing SEC lawsuit against Ripple. While regulators have dropped enforcement actions against Coinbase, Uniswap, and Kraken, Ripple remains locked in legal battles. The lack of resolution continues to create uncertainty for investors, making XRP a riskier bet compared to other altcoins.

A positive surprise in the lawsuit could trigger another rally, but until then, XRP’s price action remains fragile.

This article is not financial advice. Always conduct your own research before making investment decisions.