XRP’s Summer Rally Faces Resistance as Dormant Wallets Come Alive

XRP has been on a rebound since the start of June, attempting to erase the losses it sustained in May. At press time, the token trades at $2.19

However, this upward momentum may be at risk as XRP long-term holders (LTHs) are using the rally as an opportunity to sell for profit.

XRP’s Short-Term Rally at Risk as Dormant Wallets Reactivate

Along with its price, XRP’s liveliness has risen since June began, suggesting that LTHs are viewing the recent price rebound as an opportunity to offload their holdings. According to Glassnode, the metric closed June 3 at 0.809. 

XRP Liveliness. Source: Glassnode

Liveliness tracks the movement of previously dormant tokens. It does this by measuring the ratio of an asset’s coin days destroyed to the total coin days accumulated. When it falls, LTHs are moving their assets off exchanges, which is often a bullish sign of accumulation.

On the other hand, when an asset’s liveliness climbs, more dormant coins are being moved or sold, signaling increased profit-taking by long-term holders.

For XRP, readings from its Liveliness confirm that its LTHs are now transferring or selling their holdings, increasing the likelihood of a correction in the near term.

Notably, this shift is largely attributed to a recent rise in the amount of XRP supply currently in profit, incentivizing some holders to take gains while the market is favorable. 

XRP Percent Supply in Profit. Source: Glassnode

Per Glassnode, after falling to a multi-month low of 79% on May 31, the metric has surged, with 82% of XRP holders now sitting on unrealized gains at press time.

As XRP rallies and more traders find themselves in profit, the incentive to sell increases, potentially triggering a wave of sell-offs that could put downward pressure on the token’s price and stall its recent rally.

Will Profit-Taking Stall the Rally or Fuel a Breakout?

Increased token circulation from LTHs typically precedes heightened selling pressure, which can dampen any XRP short-term rallies. 

If the current profit-taking trend continues, the altcoin’s price could retrace significantly, potentially falling below $2 to trade at $1.99.

XRP Price Analysis. Source: TradingView

However, if the bulls strengthen their dominance, they can sustain the price rally and push XRP toward $2.29, potentially surpassing it.