XRP price rises ahead of RLUSD launch, but a reversal is possible

XRP price continues to rise, becoming one of the best-performing major cryptocurrencies on the market.

Ripple (XRP) is up over 12%, continuing the uptrend that began when it dropped to $1.9065 on December 10.

This rise comes after Ripple CEO Brad Garlinghouse announced that the company will launch the RLUSD stablecoin on December 17. The stablecoin will initially launch on major exchanges such as Uphold, Bitstamp, MoonPay and others.

The launch comes after Ripple developers received approval from New York authorities after months of regulatory review. Ripple Labs aims to make RLUSD a major player in the stablecoin industry by providing institutional-grade solutions.

Additionally, Ripple hopes that RLUSD will complement XRP to increase cross-border transaction volumes in the coming months.

Still, RLUSD faces serious risks. The biggest risk is that it won’t gain traction among users. Some stablecoins issued by large companies have not been popular in the past.

For example, the market cap of Justin Sun’s USDD stablecoin has remained around $740 million since its launch in 2022. Similarly, PayPal USD, launched by PayPal in 2023, has also struggled and has $458 million in assets.

On the other hand, Tether (USDT) continued to increase its market share, with its market value exceeding $140 billion. It has become the most used stablecoin in the industry with over 66% market dominance.

XRP price chart indicates potential risks XRP price chart | Source: crypto.news

Another potential risk to Ripple price is that users can sell the news. This is a situation where users buy an asset in anticipation of a major event and sell it when that event occurs. A good example of this was what happened after the last Bitcoin (BTC) halving in April. Bitcoin rose before the halving and retreated afterwards.

Another technical risk for XRP is the double top formation developing at $2.90. A double top is a bearish chart formation that usually precedes a price pullback. In this case, XRP could reach $2.90 and then fall back to $1.90.

Moreover, the cryptocurrency may experience a mean reversion, where the price declines towards its key moving averages. Currently, XRP is trading around 60% above the 50-day moving average, increasing the possibility of a correction.

Conversely, a move above the double-top resistance at $2.90 will invalidate the bearish view and could push XRP towards the $5 level.