XRP recently experienced a significant correction, pulling back from its multi-year peak — and many industry watchers believe this decline was bound to happen.

XRP Falls After Surging to $3.66

The cryptocurrency market took a hit recently, with XRP falling sharply. After reaching a new high of $3.66 on July 18, the token saw strong downward pressure as August began. XRP initially tried to stabilize above $3, but a fresh wave of selling pushed it below that mark. The token dropped by 6.62% in just one day — its steepest single-day loss in a month.

Profit-Taking by In-the-Money Wallets

This downturn wasn’t entirely unexpected. Ahead of the drop, analysts highlighted a warning sign: over 94% of XRP wallets were in profit as the token traded above $3. While this figure reflects strong historical gains, it tends to precede waves of profit-taking, as holders look to capitalize on their gains.

The crypto market has seen this story unfold before. During XRP’s surge to $3.30 in January 2018, wallet profitability exceeded 90%, similar to recent figures. Soon after, XRP tumbled by 43.57% within that same month, eventually facing a staggering 95.5% correction from its peak.

This cycle repeated during the 2020-2021 bull run. XRP hit $1.96, pushing wallet profitability beyond 90% again. Predictably, a new round of profit-taking ensued, triggering an 85% collapse in price afterward. These recurring patterns highlight just how closely profitability aligns with sell-offs.

Could This Time Be Different for XRP?

Market analyst Winny underscored the historic nature of these crashes when wallet profit rates hit high levels. As he put it, with profitability climbing over 90%, it’s only a matter of time before “someone sells.” This prediction has already started to unfold. However, the crash hasn’t been as dramatic—at least not yet. If XRP were to mirror past collapses, an 85% fall would take it to around $0.45, while a 95% decline would bottom it out at $0.15.

Despite these risks, Winny suggested this cycle may break the mold due to a few bullish signals. New whale wallets have been appearing, and network activity remains high. Additionally, XRP’s chart patterns have shown promise even during the ongoing market correction. The token has slipped below $3, but it’s now hovering around $2.9 and attempting to regain lost ground. Notably, some see these lower levels as an opportunity rather than a setback.

Relative Strength Index (RSI) data suggests XRP still has momentum for a rebound.

RSI Suggests Room for XRP Growth

Interestingly, despite the dip in price, XRP’s Relative Strength Index (RSI) signals possible upside. The current daily RSI sits at 43.05, indicating that the asset is not yet overbought. For comparison, back in mid-July when XRP traded around $2.9, the RSI had surged to 83.69. Despite those overbought conditions, it later went on to reach $3.66.

With today’s RSI much lower, the market has room to push higher before hitting resistance. If history is any indicator, a modest rebound could reignite momentum — especially if the broader market stabilizes and selling pressure eases.

Related: XRP Price: $12M Max Pain for Bears

While short-term volatility continues to impact XRP, the underlying data hints at resilience. With rising whale interest, historical patterns, and technical indicators aligning, XRP investors are watching closely to see whether the current correction will diverge from past cycle crashes — or repeat them once again.