XRP Hits Most Overbought Level Since December: Profit-Taking Ahead?

XRP (XRP) has entered its most overbought territory since December 2024, raising the risk of a near-term price correction as traders may decide to lock in profits.

Political Buzz, Fed Rumors Fuel XRP Rally

The XRP/USD exchange rate has jumped by almost 50% month-to-date to reach $3.29 on July 17. Its rise accompanies Bitcoin’s (BTC) rally to a new record high above $123,000, as well as Ether’s (ETH) jump toward the $3,500 mark for the first time since January.

A combination of political and regulatory catalysts appears to be fueling the crypto rally.

This week, the US Congress advanced three major crypto-friendly bills, including the FIT21 framework and a stablecoin oversight bill, signaling regulatory clarity on the horizon.

At the same time, speculation that President Donald Trump may remove Federal Reserve Chair Jerome Powell if reelected has stoked hopes of a more dovish Fed, raising rate cut prospects and driving capital toward risk assets like crypto.

XRP’s Technicals Flash Warning Signs

XRP’s rally, however, is now flashing technical warning signs. Its daily relative strength index (RSI) has surged to 85.81.

In December 2024, XRP dropped 34.61% after its RSI peaked above 85. Also, in March 2025, a prolonged overbought phase led to a 52.51% decline.

These past drawdowns came after vertical rallies similar to XRP’s current price action.

Notably, the token is also trading well above its 50-day and 200-day exponential moving averages, suggesting that any consolidation could turn into a mean-reversion move toward the levels.

In other words, XRP is facing overbought correction risks toward $2.40 and $2.17 in the coming days.

But There’s a Catch…

…An overbought RSI does not point to an immediate selling pressure.

For instance, a similar setup occurred in late 2024, when XRP’s RSI stayed elevated for weeks. Instead of reversing, the price surged over 316%, peaking near $2.88 before cooling off.

This fractal suggests XRP can remain overbought during strong uptrends, especially after a breakout. If history repeats, XRP could extend its rally toward the $5–$6 range in the coming weeks, with short-term pullbacks likely part of a broader bullish continuation.