Ripple’s XRP has seen its price significantly erode in recent weeks following a meteoric rise of nearly 500% between November 6 and December 3. Since it reached a multi-year high of $2.90 on December 3, the altcoin has been in a downward trend.
With strengthening bearish momentum, the cryptocurrency is poised to fall below the $2 support mark in the near term. This analysis explains why that may happen.
Ripple Token Sees Surge in Selloffs
An assessment of the XRP/USD one-chart has shown that since peaking at $2.90 on December 3, the cryptocurrency has been trapped in a descending triangle, a bearish technical pattern.
This pattern appears when an asset’s price creates a series of lower highs while maintaining a horizontal support level. This pattern indicates increasing selling pressure and often signals a potential bearish breakout if the price falls below the support.
For XRP, this support is formed at the critical $2 price level. However, with the strengthening selling pressure, the bulls might find it challenging to defend this price point at this time. One reason for this is the low accumulation from XRP whales in recent weeks.
According to Santiment, XRP whales controlling between 10,000,000 and 100,000,000 tokens have reduced their holdings by 350 million XRP since December 4. This means that during the period in review, this cohort of XRP investors has collectively sold tokens worth $746 million, contributing to the downward pressure on its price.
A reduction in whale accumulation is concerning because these large holders often provide stability to the market by holding substantial amounts of tokens. Their selling activity can trigger panic among smaller investors, worsening price declines and increasing market volatility.
XRP Price Prediction: Will $2 Hold?
On a daily chart, XRP currently trades below its 20-day exponential moving average (EMA), which calculates the average price of an asset over the past 20 days, giving more weight to recent prices to capture short-term trends better.
When an asset’s price drops below this key moving average, it confirms bearish sentiment, indicating a downtrend or increased short-term selling pressure.
If selling pressure strengthens, the XRP token price may break below the $2 support offered by the lower line of its descending triangle. In that scenario, the token’s price will plunge to $1.88. If this level fails to hold, XRP’s price may dip further to $1.34.
On the other hand, if sentiment shifts from bearish to bullish, XRP’s price will climb above its 20-day EMA, which offers a dynamic barrier or resistance at $2.18. A successful breach above this level could propel the XRP token price to its multi-year high of $2.90.
Disclaimer
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