Here’s why XRP price risks 25% drop in the coming sessions
XRP price has dropped nearly 25% over the past month. It risks extending its downtrend over the coming weeks as bearish technicals continue to cast a shadow upon any potential recovery.
- XRP price risks downside in the coming weeks as its price remains below key moving averages.
- XRP futures open interest is down roughly 50% from what was seen earlier this year.
According to data from crypto.news, XRP (XRP) price has dropped nearly 25% over the past month amid a broader market retracement coming on the back of Bitcoin (BTC), the bellwether falling below multiple key support levels, and investor caution amidst macro headwinds and geopolitical tensions.
While XRP managed to erase some of these losses over the past week, gaining 7% amid an increase in bullish positioning from investors, the momentum quickly evaporated as the 4th-largest crypto asset fell below $1.5. At the time of writing, XRP price remains 38% below its yearly highs.
XRP price action is flashing bearish signs
On the daily chart, XRP price remains below the 50, 100, and 200-day moving averages, confirming a deteriorating technical structure and increasing the odds of extending its correction. This is especially true in the short term, as the 20-day moving average has crossed below the 50-day moving average.
Adding to this, the Chaikin Money Flow index showed a negative reading as of the last check. A negative reading on this indicator means that distribution is outweighing accumulation and could suggest a lack of buying interest among large holders.
However, it should be noted that XRP appears to be trading within a descending broadening wedge pattern. Such a pattern formed with two descending and diverging trendlines is often considered a precursor for a potential bullish trend reversal.
Nevertheless, bearish technicals currently seem to outweigh any glimmer of hope for a quick reversal, especially considering the broader risk-off sentiment permeating the global markets.
Under these conditions, XRP price could be positioned for a potential drop to $1.17, where it will touch the lower trendline of the pattern before any meaningful recovery. That would put XRP 25% below current price levels.
At press time, futures traders also seem to be scaling back on potential bets. This could dry up liquidity, adding further risk of sharp volatility if demand for the token continues to wane. CoinGlass data show futures open interest in XRP declined by 2.6% to $2.46 billion over the past day, nearly half of the $4.55 billion recorded in early January.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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