XRP Price Drop Explained: Market Trends and Key Indicators

XRP Faces Price Pressure: Analyzing the Latest Trends

Today, XRP's price has experienced a significant 5% drop, primarily influenced by bearish on-chain metrics and concerning technical indicators. In the past 24 hours, XRP's value fell by 4.8%, aligning with a wider market downturn that witnessed a 6.5% decline in the total cryptocurrency market cap, which now stands at $3.35 trillion. This price decrease was accompanied by a striking 114% increase in trading volume, underscoring notable sell-side activity.

Understanding XRP's Price Decline

The primary catalyst behind XRP's recent price downturn is the series of massive liquidations occurring in its derivatives market. According to data from CoinGlass, over $12.92 million in long positions were liquidated within a 24-hour timeframe, contrasting sharply with the mere $3.86 million in short liquidations. This forced selling has contributed to the increased downward pressure on XRP's market value.

This situation mirrors the events that took place between December 18 and December 20, when liquidations totaled $72.6 million in long positions, resulting in a notable 23% price drop that saw XRP hit a low of $1.95.

Market Sentiment Leans Bearish

The funding rates for XRP have also taken a bearish turn, dropping from 0.21% on January 7 to -0.11% on January 8. A negative funding rate indicates a rise in short interest and a decline in demand for long positions, a sentiment echoed by the drop of $300 million in open interest during the same timeframe.

Long-Term Holders Contribute to Selling Pressure

On-chain analysis reveals that long-term holders have played a role in the recent sell-off. Data from Santiment highlights a surge in XRP's Dormant Circulation Supply (356D), which tracks tokens that have remained unmoved for over a year. This figure skyrocketed from 8.3 million on January 4 to 208.3 million by January 7, suggesting that long-term investors have offloaded over $467 million in XRP, further intensifying the selling pressure that contributed to a 7.2% price decrease since January 4.

Key Technical Levels for XRP to Watch

XRP's price is currently facing resistance at the upper boundary of a descending parallel channel, which is positioned at $2.45. Should the bulls fail to convert this level into support, XRP may experience further declines to around $2.15, supported by the 50-day Simple Moving Average (SMA). A break below the $2.15 threshold could open the door for deeper setbacks toward $2.00.

Moreover, the Relative Strength Index (RSI) is currently positioned at 53, which indicates a neutral market stance, allowing for potential breakouts in either direction. For XRP to trigger a bullish reversal, it needs to overcome the strong resistance level at $2.45.

Future Outlook for XRP Price

Despite the prevailing bearish momentum in XRP’s price action, there remains a semblance of optimism among some analysts. Notably, crypto analyst Steph Is Crypto has predicted that XRP still holds the potential to break out of its bull flag formation, possibly reaching an ambitious price target of $5.60.

Conclusion

In summary, while XRP is currently undergoing notable price declines, the landscape may shift if key resistance levels are broken. Traders and investors should remain vigilant and monitor market sentiments and on-chain data closely for potential signs of recovery.