Will XRP price plummet again?

XRP (XRP) has fallen more than 25% in three weeks since hitting $2.90, its highest since January 2018, and was trading as low as $2.13 on December 23.

Profit taking due to XRP’s overbought levels and the Federal Reserve’s hawkish pivot were the main reasons for the price decline.

Let’s see if the price of XRP can fall further in the future.

XRP risks falling 15-20% over the holiday period.

The XRP price has been consolidating within the Fibonacci retracement range since early December, with the 1.618 Fib level near $3 acting as resistance and the 1.0 Fib level near $1.98 acting as support.

As of December 23, XRP has entered a correction phase after failing to break the $3 resistance level and is likely to fall towards the $1.98 support level, approximately 15% below the current price, by the end of December.

The bearish bias is reinforced by the Relative Strength Index (RSI) on XRP’s weekly chart, which remains above 70, indicating overbought conditions and a possible slowdown or reversal of the recent uptrend.

XRP whales are locking in profits

Meanwhile, XRP’s richest addresses show an increasing distribution.

Notably, XRP supply to addresses holding at least one million tokens declined throughout December, coinciding with the consolidation phase over the same period.

When large holders (whales) reduce their XRP holdings, it is a sign that major investors are taking profits or exiting their positions. These sales increase the supply of XRP in the market, which can put downward pressure on the price if there is not enough buying demand.

XRP’s descending triangle suggests the next 20% decline.

XRP appears to be forming a descending triangle pattern on the daily chart, suggesting a bearish outlook for the cryptocurrency. When appearing during an uptrend, this technical setup indicates a potential bearish reversal.

For XRP, the horizontal support level is close to $2.19, while the trend line connecting the lower highs extends downward. A clear break below the $2.19 support level would confirm a descending triangle, potentially pushing the price further down.

The technical target for the pattern is calculated by measuring the maximum height of the triangle and subtracting it from the breakdown point, which indicates a possible decline towards $1.69. This target is aligned with the 50-day exponential moving average (50-day EMA, red wave).

Conversely, a bounce from the triangle’s lower trendline could lead to XRP testing the upper trendline at around $2.50 as the next upside target. A clear break above the upper trendline would likely invalidate the bearish reversal setup and set XRP on a path to retest its yearly high of $2.90.

XRP bull flag could break the downtrend with a 60% breakout.

The current consolidation of XRP, which could result in a short-term price correction, could shake weak hands and allow new buyers to enter lower price levels. This could resume the overall upward trend as predicted by several analysts.

For example, analyst Bark expects XRP to consolidate within a bull flag pattern, causing the price to surge to $3.50 by January 2025. This represents an increase of approximately 60% from current price levels.

The upside outlook is receiving additional support from bullish fundamentals, including a possible conclusion to the lawsuit between the SEC and Ripple under President Donald Trump’s term and the possible launch of a spot XRP exchange-traded fund (ETF).

relevant: XRP price chart ‘fire flag’ targets $15 despite consolidation phase.

Further fueling market sentiment are rumors that Bitstamp may develop a cryptocurrency derivatives exchange on the XRP Ledger, which could strengthen XRP’s use cases and increase speculative interest.

In a December 21 post, Bitstamp’s official X handle read, “XRP will make history next year.”

This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.