crypto price market is facing a downturn, and the XRP price drop is not immune to the impact. After reaching an all-time high of $3.40 in mid-January, XRP has experienced a significant drop, now trading around $2.20. This drop, which represents a 35% decline over the past two months, has raised concerns among investors about the future of the token.
As the crypto market experiences broader market-wide losses, the question remains: can XRP price drop back to $3, or will it crash to $1.50?
Factors Behind XRP’s Price Drop
Several key factors have contributed to the current downtrend in XRP’s price. Bitcoin has seen a drop of 4%, and other altcoins, such as Ethereum (ETH), Solana (SOL), and XRP, have also experienced significant losses. The overall market is down by 7%, and the recent market dip is primarily attributed to geopolitical factors, such as rising tensions in the U.S.-China trade war, Donald Trump’s executive order preventing taxpayer funds from purchasing altcoins, and a massive $616 million in liquidations, primarily from long positions.
XRP Faces Profitability Decline
XRP has also faced internal challenges as its price continues to decline. On-chain data reveals that the amount of XRP held in profit has decreased by 6.39 billion tokens in just one week, marking its lowest level of the year. This drop in profitability has resulted in a higher number of XRP holders at a loss, leading to increased selling pressure. This sentiment could lower the price in the short term, as traders may continue to offload their positions.
XRP’s Declining Performance
One key reason for XRP’s lackluster performance is the noticeable slowdown in new investor demand. According to Santiment, only 4,516 new wallet addresses were created on a recent Sunday to trade XRP. This is the lowest daily count recorded for the year, signaling a drop in fresh investments. A decrease in demand typically leads to slower trading activity, which weakens support for the token. If this trend continues, it will be difficult for XRP to recover and sustain upward momentum in the short term.
Moreover, broader market sentiment is not helping. Morgan Stanley analyst Michael Wilson has forecasted a 5% drop in the S&P 500 in the year’s first half, which could drag XRP and other altcoins lower. As market liquidity tightens, investors may retreat from riskier assets like altcoins, adding to XRP’s downward pressure.
XRP Faces Key Resistance
On the technical side, XRP has faced significant resistance since its all-time high. The token has been trading below a descending trendline, indicating a bearish pattern characterized by lower highs. As long as XRP fails to break above this descending trendline, it remains vulnerable to further downside pressure.
Currently, XRP is hovering around $2.17, with resistance at $2.93. If the price fails to break through this resistance, it could continue its downward trajectory. In such a case, the following key support level to watch would be $1.47. XRP may test this support level if selling pressure intensifies, which could trigger further declines toward $1.50 or lower.
XRP’s Struggle for Recovery
For XRP to reverse its price decline, it would need a substantial shift in sentiment and intense buying pressure. If XRP breaks above the descending trendline, the next significant resistance is $2.93. A breakout above this level could signal a recovery and provide hope for a potential rebound to $3. However, with demand at a yearly low and bearish sentiment still dominating, XRP faces a brutal battle in the near term.
Unless investor interest picks up and market conditions improve, XRP could remain under pressure, facing the risk of further declines in the coming weeks.
Final thoughts
XRP’s future price action largely depends on external market factors and internal demand for the token. If the broader market downturn continues and XRP fails to break through key resistance levels, the price could drop, potentially testing levels as low as $1.50. However, if investor interest picks up and the market sentiment shifts, a rebound to $3 or higher is still possible.
In conclusion, the short-term outlook for XRP is challenging, with the risk of further losses. However, XRP’s long-term recovery will depend on various factors, including new demand, broader market conditions, and the crypto market’s ability to regain its bullish momentum.
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