Analysts are sounding the alarm that XRP could see a steep decline of up to 40% by February.
The warnings stem from bearish technical signals and mounting pressure from large investors, often labeled as whales, who are increasing their sales.
Recent Price Movements and Market Influences
After a remarkable rise to $2.90—the highest point in nearly five years—XRP has been on a downward spiral, shedding 22.25% of its value in just a month.
As of January 10, it hit a low of $2.26.
Several factors have played a role in this decline.
Investors have been cashing out due to overbought conditions, robust U.S. economic data, and a shift in the Federal Reserve towards a more aggressive monetary policy, all contributing to the unsettling drop in XRP’s price.
Technical Analysis and Price Predictions
A closer look at XRP’s daily chart reveals a symmetrical triangle pattern, characterized by trendlines that converge, forming a series of higher lows and lower highs.
This setup suggests market hesitance and the likelihood of a significant price shift, either upwards or downwards.
At present, XRP finds itself testing the triangle’s upper trendline.
Historically, this position often precedes price slides towards the lower trendline, indicating a potential decline to around $2.05, which coincides with the 50-day exponential moving average (50-day EMA).
Should XRP break below this lower boundary, it might plummet even further, possibly dropping to $1.36—a staggering near 40% fall from current levels by February.
Support and Resistance Levels
Despite this possibility, the prevailing market conditions hint at a more pessimistic outlook.
Major investors are apparently shedding their holdings as prices stabilize.
Recent data shows that the volume of XRP in wallets with over 1 million tokens has sank to an all-time low of 90.50 billion.
On a weekly basis, XRP has been oscillating between the $1.98 and $3.03 range.
After touching the $1.98 support level on January 10, there was a temporary bounce back.
However, this upward movement appears to be losing steam, leading to a 4% setback in the current weekly cycle.
Additionally, the weekly relative strength index (RSI) for XRP remains elevated, hovering above the overbought level of 70, raising concerns about the possibility of a significant correction in the near future.
If bearish sentiments gain traction, it’s likely that XRP will revisit the $1.98 support threshold within the coming days or weeks.
If XRP breaches this critical support level, it might set the stage for a drop towards the 20-week EMA, which is currently around $1.50.
On a brighter note, if XRP can hold its ground above $1.98, it may trigger a rebound towards the $3 mark.
The market’s response within the $2.15 to $2.20 range will be crucial in determining future movements.
Should this support hold firm, a notable rise toward $2.91 could be on the horizon.
However, if this level falters, the market may potentially dive toward liquidity positions beneath the $2.00 mark.
Source: Cointelegraph
