XRP's Rally to $3 Signals Potential Market Top Amid High Profitability

According to Cointelegraph, XRP's recent surge to over $3 has resulted in nearly 94% of its circulating supply being in profit, as indicated by Glassnode data. This significant profitability level, reaching 93.92% as of Sunday, highlights substantial investor gains, with the cryptocurrency experiencing a remarkable increase of over 500% in the past nine months, climbing from under $0.40 to $3.11. Historically, such high profitability levels have marked overheated market conditions. In early 2018, over 90% of XRP holders were in profit when the price peaked near $3.30, followed by a dramatic 95% price reversal. A similar pattern emerged in April 2021, when profitability levels above 90% preceded an 85% crash from a peak near $1.95. This broad profitability often leads to increased risk of distribution as traders may seek to realize their gains, potentially unfolding a similar scenario now. XRP's Net Unrealized Profit/Loss (NUPL) indicator is also signaling potential top risks. This metric, which measures the difference between unrealized gains and losses across the network, has entered the "belief–denial" zone, a phase historically observed before or during market tops. For instance, in late 2017, XRP's NUPL spiked to similar levels just as the price peaked above $3.30. A comparable pattern was seen in April 2021, when NUPL readings above 0.5 coincided with XRP's top near $1.95 before another sharp downturn. The current trajectory suggests that while investors are heavily in profit, they have not yet reached full "euphoria." However, the risk of profit-taking and distribution will increase if NUPL rises toward greed levels for the first time since 2018. To counter potential selling pressure and avoid a deeper correction below $3, XRP might need to attract fresh inflows, driven by institutional demand and broader altcoin momentum. XRP's price is currently consolidating within a descending triangle pattern after surpassing $3, a setup typically considered bearish. This pattern is characterized by lower highs against horizontal support near $3.05. Earlier this month, XRP briefly dipped below this support in a fakeout, only to rebound back inside the structure. The repeated retests of the lower trendline increase the risk of a decisive breakdown. A confirmed move below $3.05 could trigger a sell-off toward $2.39 by September, representing a potential decline of about 23.50% from current price levels. Conversely, for the bulls to regain upside momentum and invalidate the bearish setup, they must break above the descending resistance line. Some speculate that in such a scenario, XRP's price could rise to $6. This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.