The XRP price continued rising, becoming one of the best-performing large-cap cryptocurrencies in the market.
Ripple (XRP) surged by over 12%, extending an uptrend that began on December 10 when the token bottomed at $1.9065.
The rally came after Brad Garlinghouse, Ripple’s CEO, announced that the company would launch the RLUSD stablecoin on Dec. 17. The stablecoin will initially debut on major exchanges such as Uphold, Bitstamp, MoonPay, and others.
The launch follows Ripple developers receiving approval from New York authorities after months of regulatory review. Ripple Labs aims for RLUSD to become a significant player in the stablecoin industry by offering enterprise-grade solutions.
Additionally, Ripple hopes RLUSD will complement XRP to boost cross-border transaction volumes in the coming months.
Still, RLUSD faces substantial risks ahead. The biggest risk is that it may not gain traction among users after all. Some stablecoins launched by big companies have failed to become popular in the past.
For example, Justin Sun’s USDD stablecoin’s market cap has remained around $740 million since its launch in 2022. Similarly, PayPal USD, which was launched in 2023 by PayPal, has struggled and has $458 million in assets.
On the other hand, Tether (USDT) has continued to grow its market share as its market cap has jumped to over $140 billion. It has become the most used stablecoin in the industry, with a market dominance of over 66%.
XRP price chart points to potential risks
The other potential risk for the Ripple price is that users may sell the news. This is a situation where users buy an asset in anticipation of a major event and then sell it when it happens. A good example of this is what happened after the last Bitcoin (BTC) halving in April. Bitcoin rose ahead of the halving and then retreated after it happened.
Another technical risk for XRP is a developing double-top pattern at $2.90. A double-top is a bearish chart formation that often precedes a price pullback. In this case, XRP may hit $2.90 and then retrace to its neckline at $1.90.
Furthermore, the coin could experience mean reversion, where the price falls back toward its key moving averages. Currently, XRP trades about 60% above the 50-day moving average, increasing the likelihood of a correction.
Conversely, a move above the double-top resistance at $2.90 would invalidate the bearish outlook and could propel XRP toward the $5 level.