Market Decline Impacts XRP: Understanding the Significance of a Bounce to $2.2

XRP has experienced a notable decrease in exchange reserves, indicating accumulation on the blockchain. A recent analysis indicated a continued bearish trend for XRP.

Key Takeaways

XRP is facing a decline in exchange reserves, suggesting on-chain accumulation.
The price struggles to breach the $2.28 resistance and is retracing towards $2.
The overall crypto market cap has dropped significantly, indicating a bearish sentiment.
Key support levels for XRP are located at $1.9 and $1.61, while resistance is found in the $2.09-$2.18 range.
Market sentiment and demand must stabilize for XRP to regain bullish momentum.

Market Decline Impacts XRP: Understanding the Significance of a Bounce to $2.2

As a result, the price of XRP has fallen back toward the $2 mark, struggling to regain the $2.28 resistance level. Over a two-day period, the total cryptocurrency market capitalization plummeted by $141 billion, with the Fear and Greed Index now at 20, signifying extreme fear. This fear is likely to affect altcoins and their recovery efforts in the near future.

Price Pattern Analysis

XRP 1-day Chart

Source: XRP/USDT on TradingView

Last week, when XRP surpassed $2.2, there was potential for a bounce to $2.58 before experiencing a bearish reversal. However, the failure of XRP bulls to maintain the price above $2.2 highlighted the strength of the sellers in the market. Despite the market-wide decline, this downturn indicates seller dominance. Support levels at $1.9 and $1.61 are crucial for long-term price stability.

XRP 1-hour Chart

Source: XRP/USDT on TradingView

On the 1-hour chart, there is a significant imbalance in the price range from $2.09 to $2.18. While this may not be a strict fair value gap, it represents a considerable supply zone overhead. If XRP bounces back toward $2.2, it could present a short-selling opportunity. For a shift to a bullish short-term outlook, XRP must exceed $2.21. Additionally, for this to happen, overall market sentiment needs to improve, accompanied by increased demand for XRP.

Indicator-Based Review

XRP Liquidation Map

Source: CoinGlass

Indicators from both the daily and 1-hour charts indicate persistent selling pressure and bearish momentum. The 20 and 50-period moving averages have acted as resistance for XRP prices. Should there be a short-term recovery toward $2.15, it is likely to encounter resistance, pushing XRP back toward or below the $2 level.

The liquidation map further supports this view, as it shows a cluster of high-leverage short positions between $2.06 and $2.15, which may act as a liquidity target in the short term. XRP might bounce higher to target this liquidity before continuing its current downward trend.

Price Hotspots to Watch

The $1.9 and $1.61 levels are critical support points based on XRP's long-term price history. In the short term, the $2.09-$2.18 resistance zone is expected to challenge XRP bulls if there is a price bounce.

Final Thoughts

Disclaimer: The information provided here does not constitute financial, investment, trading, or any other form of advice and reflects only the writer’s perspective.