XRP News: XRP Bulls Face Challenges Amid Rising Bitcoin Dominance, Analyst Warns
XRP traders may face significant risks if Bitcoin dominance continues its upward trend, according to Swyftx lead analyst Pav Hundal. Despite XRP's recent rally, which saw it hit a yearly high of $2.85 on Dec. 3, the token has since retraced nearly 18%, sparking concerns among leveraged traders banking on a rebound.Bitcoin Dominance: A Looming ThreatAt the time of writing, Bitcoin's dominance stands at 55.30%, down 5% over the past week. Analysts speculate that this metric could peak between 60% and 70% before altcoin capital rotations begin. Hundal warns that a rise in Bitcoin dominance could result in a "bloodbath of liquidations" for leveraged XRP positions, as traders shift their focus back to Bitcoin.“The real danger right now for highly leveraged XRP bulls is that Bitcoin dominance increases again. A rotation from XRP to Bitcoin would very likely lead to a bloodbath of liquidations,” said Hundal.Surge in Leveraged XRP PositionsData shows that XRP open interest (OI) — the total number of unsettled derivative contracts — hit $3.44 billion on Dec. 5, marking a $1.44 billion increase compared to its 2021 rally. Traders have increasingly "reloaded" long XRP positions, despite the token’s price moving lower, reflecting heightened speculative interest.“The market seems to have developed a thirst for leveraged long XRP exposure,” Hundal noted, adding that retail activity has surged, with open interest nearing double the levels seen in 2021.At publication, XRP is trading at $2.37. A further 7% decline to $2.18 could liquidate $104.4 million in long positions, amplifying volatility.Market Approaching 'Euphoria Territory'?XRP has gained significant momentum since the U.S. presidential election, with a 431% rally triggered by Donald Trump’s victory. However, Hundal believes the market may be nearing "euphoria territory," as traders' exuberance over-leveraged positions could lead to heightened risks.The XRP/BTC ratio, a measure of XRP’s strength relative to Bitcoin, has risen by 47.6% over the past 30 days, highlighting the token's robust performance. However, Hundal cautioned that stability in Bitcoin's price could be essential for easing market jitters.“If Bitcoin stabilizes, it could soothe nerves and spot volumes could pick up again,” Hundal said.Outlook for XRP BullsWhile XRP remains a favorite among retail traders, the combination of rising Bitcoin dominance, leveraged exposure, and high open interest levels suggests the potential for significant volatility. Traders are advised to monitor market trends closely as Bitcoin’s dominance and macroeconomic conditions play a pivotal role in shaping XRP's trajectory in the near term, according to Cointelegraph.