XRP Down 2% as Market Rotation Shifts Capital to High-Momentum Tokens

XRP Price Slip Reflects Classic Market Rotation

XRP finds itself lagging the broader cryptocurrency market, trading near $2.13 on December 4, 2025, marking a decline of close to 2% even as leading digital assets like Solana and Ethereum posted significant gains. This divergence reveals an important market dynamic: capital is flowing toward high-momentum, speculative assets rather than established mid-cap cryptocurrencies.

The shift reflects a pattern seen multiple times in crypto history. When Bitcoin consolidates and market sentiment turns cautiously optimistic, retail traders and some institutional players chase momentum. Assets that have already surged become attractive for quick gains, while slower-moving tokens like XRP experience relative weakness. This dynamic plagued XRP throughout November, which saw the token decline nearly 13% for the month.

What makes this weakness notable is its contrast with recent institutional developments. Multiple spot XRP ETF approvals were celebrated as transformative for the asset. Yet in December—historically a strong month for XRP—the token struggles to maintain momentum. This disconnect suggests that while institutions may be positioning for the long term, short-term traders remain unconvinced about immediate upside potential.

Technical Weakness Signals Bearish Sentiment

From a technical perspective, XRP’s situation looks decidedly bearish. The token trades below all major moving averages: the 20-day SMA at $2.1388, the 50-day SMA at $2.3050, and critically, the 200-day SMA at $2.6137. This alignment indicates sustained downward pressure and suggests that intermediate and longer-term traders are positioned defensively.

When all three moving averages align in a bearish setup, it signals that confidence in a near-term recovery is limited. The fact that XRP cannot establish support at the 20-day average suggests that near-term momentum remains soft.

For traders watching key resistance levels, the $2.28 zone has become critical to monitor. A firm break above this area could potentially open a path toward $2.47 and possibly $2.75. However, current price action suggests that reaching these levels will require a catalyst stronger than what we’ve seen from ETF inflows and settlement developments alone.

Network Activity Surges Despite Price Pressure

One of the most intriguing contradictions in XRP’s current situation involves on-chain metrics. While price has been under pressure, network activity has surged dramatically. The XRP Ledger Velocity indicator reached a yearly high of 0.0324 on December 2, 2025, representing one of the most active periods for the network in 2025.

This spike in velocity—which measures how frequently XRP moves across the network—typically signals increased economic activity, higher transaction volume, and greater participation from both retail traders and whale investors. When coins circulate rapidly rather than sitting dormant in wallets, it generally indicates healthy ecosystem engagement and liquidity.

However, this elevated activity has not translated into corresponding price appreciation, raising important questions. Some analysts interpret this dynamic as evidence of strong trading activity and liquidity building, potentially foreshadowing a major move. Others suggest it reflects more speculative positioning and potential distribution rather than organic demand for XRP’s utility.

Whale Movements and ETF Developments

Large-scale XRP transfers between exchange wallets have added another layer of complexity to the current narrative. On-chain data shows significant whale activity, with 46 million XRP moved in recent trading sessions. Traders typically interpret such transfers as indicators of liquidity shifts and changes in circulating supply pressure.

Meanwhile, the regulatory landscape continues to provide mixed signals. Multiple spot XRP ETF applications have been approved by NYSE Arca, including products from Franklin Templeton and Grayscale. Canary Capital’s spot XRP ETF (ticker: XRPC) officially launched for trading on November 13, 2025, marking the first physically-backed XRP ETF on Nasdaq.

Yet despite these approvals, regulatory timelines continue to lag behind other major digital assets. Analyst Viktoras Karapetjanc noted that the combination of regulatory stagnation and weak on-chain engagement continues to weigh on XRP’s sentiment relative to peers.

Historical Context and Past Performance

To understand XRP’s current challenges, it’s important to recognize the asset’s journey. For over four years, XRP existed in regulatory limbo due to the SEC’s lawsuit against Ripple Labs, which began in December 2020. By August 2025, when Ripple and the SEC settled their dispute with a $125 million settlement, the market experienced an immediate reaction, with XRP spiking 11% on news of regulatory clarity.

However, a critical insight emerges from recent price action: initial relief rallies built on settlement news have reversed in the months since. XRP peaked near $3.54 in July 2025 but has since declined substantially. This pattern reveals an important market dynamic: regulatory clarity alone is insufficient to sustain upward momentum. Investors require ongoing catalysts—actual institutional adoption, ETF inflows, genuine payment volume—rather than simply positive news.

December Outlook and Key Levels

Analysts remain divided on XRP’s December prospects. Some point to strong technical patterns as potential reversal signals that could support a rally to $2.60-$2.85. Others note that December has historically shown mixed performance, with median returns of -3.16% despite an average increase of 69.6%.

Ray Youssef, CEO of NoOnes, believes institutional demand through ETFs could provide a “major tailwind” for December price action. However, he also warned that if broader market conditions weaken and ETF flows reverse, XRP will likely retest $2.00.

Key support remains anchored around $2.00-$2.05, where buyers have repeatedly defended the level. A breakdown below this area could expose XRP to $1.80 and potentially revisit the $1.772 double-bottom support level established in October and November.

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The Institutional Story Continues

While current price weakness is undeniable, the institutional narrative around XRP continues to develop favorably. Ripple Prime’s infrastructure expansion and the launching of multiple spot ETFs represent genuine development that was unimaginable during regulatory uncertainty years.

For now, XRP’s nearly 2% decline reflects traders taking profits and waiting for more convincing evidence that recent institutional positioning will translate into sustained demand. Until XRP can reclaim key moving averages and establish higher lows, the near-term bias remains cautiously bearish despite the compelling longer-term narrative.

_{Sources: Binance Square, FXStreet, and analyst commentary from industry participants.}