Short term XRP holders are rushing to take profit, is the market about to enter a deep correction?

In the past week, the price of XRP has surged nearly 10%, taking full advantage of the strong bounce back wave in the crypto market as the global market capitalization exceeded 4.13 trillion USD.

However, this upward momentum has also triggered increased selling pressure, as on-chain data reveals that many short-term investors may have begun to enter the profit-taking phase.

Short-term investors begin to retreat

The HODL Waves index — a measure of the amount of tokens held over time — is showing that two key groups of investors are rapidly reducing their holdings.

Specifically, on July 20, wallets holding XRP for about 3–6 months controlled approximately 12.07% of the supply. By August 11, this figure had dropped to only 8.93%. Similarly, the group of wallets holding for 1–3 months also saw a decrease from 6.78% on August 1 to 5.83% at the time of writing.

Notably, the 1–3 month group is the strongest buying force when XRP is around the $2.77 mark. Their continuous selling in recent times further reinforces the narrative of "taking profits when there are gains."

Short-term investors are exiting | Source: GlassnodeThe HODL Waves index has special significance as it directly reflects the holding behavior of investors over time. When the proportion of new holders continuously decreases, it often means they are realizing profits after a price increase. This could be a sign that short-term sentiment is changing — a shift before the larger market trend moves.

Reserves on the exchange indicate increasing selling pressure

When placing the HODL Waves data in decline alongside the XRP reserves figures on exchanges, the market picture becomes clearer. Just in the past week, the XRP reserves on exchanges have significantly increased. Historically, every time reserves rise in parallel with short-term holders reducing their positions, the price often enters a correction phase.

XRP price and exchange reserves increase | Source: CryptoquantThis scenario repeated on July 22, when reserves unexpectedly surged and the price of XRP quickly plummeted from around $3.55 to $3.17 in just one trading session. The reason is quite simple: tokens transferred to the exchange are more likely to be sold. When this coincides with a group of holders narrowing their portfolios, it is highly likely a sign of profit-taking activity.

The XRP price structure is still in an upward trend — temporarily

On the 4-hour chart, XRP continues to maintain an ascending triangle pattern, with key technical levels being closely monitored by the market. The strong resistance is currently at $3.34; if successfully broken, the price could quickly advance to $3.57, even challenging the historical peak of $3.66.

On the contrary, the $3.15 zone plays an important support role. Breaking through this level would not only pull the price back to $3.07 but also break the short-term upward structure, opening up the risk of a deeper correction.

For traders, the short-term accumulation scenario before continuing to rise will be triggered if the closing price is above $3.34. Before that point, the resonance between profit-taking pressure and the increasing amount of reserves on the exchange is the factor causing the market to be cautious.

XRP/USDT chart on 4-hour timeframe | Source: TradingViewIn summary, the XRP chart still leans towards the bulls, but the actions of short-term investors along with exchange reserve data suggest that the upward momentum may stall before reaching new peaks. The support level of $3.15 ( and the resistance level of $3.34 ) will be the "hot spots" determining the next direction of the market.

SN_Nour