Why is XRP price down today?

XRP price is down today, dropping 4.8% over the last 24 hours. This drawdown mirrors a similar move in the broader crypto market, whose total market capitalization has dropped by 6.5% on the day to rest at $3.35 trillion. XRP’s price performance on Jan. 8 is accompanied by a 114% jump in trading volume, reinforcing the intensity of the sell-side activity. Let’s look at the factors driving XRP down today.Over $4.5 million in long XRP positions liquidatedThe drop in XRP price has been accompanied by massive long liquidations in its derivatives market, according to data from CoinGlass. The liquidation heatmap below reveals that the XRP futures market witnessed the liquidation of over $12.92 million worth of long positions in the last 24 hours. In comparison, only $3.86 million worth of short positions were liquidated in the same period.Bullish traders are forced to sell their positions when long positions are liquidated. This sudden selling adds downward pressure on the price, accelerating the decline.This mirrors the $72.6 million in long liquidations between Dec. 18 and Dec. 20, which accompanied a 23% price drop over the same period, setting a low at $1.95.Furthermore, the drop in XRP price accompanies a decline in its funding rates. XRP’s funding rates have dropped from 0.21% per week on Jan. 7 to -0.11% per week on Jan. 8. The drop in funding rates further showed reduced demand for long positions and increased caution among XRP traders.A negative funding rate indicates that more traders are currently interested in short positions, with open interest decreasing by $300 million over the past day.Offloading by long-term XRP holdersData from Cointelegraph Markets Pro and TradingView shows an 11% weekly increase in the price of XRP, reaching a local high of $2.50 on Jan. 4. The pair has since corrected by around 10% to an intraday low of $2.58 on Jan. 8.This correction can be partially attributed to long-term holders selling since Jan. 4, dampening bullish price action. The Dormant Circulation Supply (356D) indicator from Santiment tracks the number of XRP tokens traded on a given day that were previously unmoved for one year or more.The chart below reveals that XRP Dormant Circulation Supply rose from 8.3 million on Saturday, Jan. 4, to 208.3 million XRP on Jan. 7.This suggests that long-term investors offloaded over $467 million worth of XRP the past few days. These types of spikes increase the supply, adding sell pressure on the XRP price.Thus, it’s unsurprising that the jump in Dormant Circulation supply since Jan. 4 has coincided with a 7.2% drop in XRP price over the same period.Related: XRP market cap of $500B 'possible' within 6 weeks, says veteran traderXRP price needs to hold key trendlineToday’s drop in XRP price is part of a correction that began on Dec. 3 after the relative strength index (RSI) entered overbought territory in the run-up to $2.90. The upper boundary of the descending parallel channel, currently at $2.45, continues to hold as resistance. If bulls cannot flip it into support, XRP could extend the decline to retest the key level of $2.15, embraced by the 50-day simple moving average (SMA).If the price falls below this level, sellers could increase their sell-side activity, potentially triggering a deeper toward the channel’s lower boundary at $2.00.The position of the RSI close to the midline at 53 suggests a moderately consolidating market, leaving room for a breakout in either direction. The bullish case for hinges on it breaking the $2.45 resistance.Despite the latest decline, several analysts are still optimistic about XRP continuing its uptrend into price discovery. One such analyst is Steph Is Crypto, who believes XRP could still break out of its bull flag and reach $5.60.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.