Token in crisis XRP has been on a steep decline since early January and is now at risk of breaking the crucial $0.50 support level. Already down 14% in the past day to $0.51, the sell-off reflects both damaging news and increasingly bearish market technology.
TLDR
- The price of XRP fell 14% to around $0.50 in part because hopes for a BlackRock spot XRP ETF were dashed after the company rejected its plan.
- Data shows that large XRP holders have been actively selling or redistributing their tokens, adding to sell-side pressure.
- XRP is testing support around the $0.50 level and a close below it risks a decline towards the $0.35 key support level.
- The price has formed a downtrend line with lower price action in recent tests, indicating continued weakness.
- Technical indicators such as RSI suggest oversold conditions that could attract bargain buyers and trigger a relief rally, but upside hurdles remain.
Much of the negative sentiment has to do with dashed hopes for a spot XRP exchange-traded fund (ETF) that would provide token exposure to mainstream investors. Previous hype about BlackRock CEO Larry Fink saying he had “nothing to say” about XRP products was flatly denied last week.
ladle: @black stone I have no plans to settle down $XRP ETF, the story unfolds, according to people with direct knowledge of the incident
— Charles Gasparino (@CGasparino) January 18, 2024
Speculative enthusiasm has died down as the world’s largest asset manager confirmed it has no plans for a short-term XRP ETF. This explanation caused XRP to fall 10% over the next day.
On-chain data also indicates continued selling pressure from prominent holders. Analytics provider Santiment has tracked a noticeable drop in supply from addresses holding between 100 million and 1 billion XRP tokens.
This decline coincides with an increase in balances for investors owning between 10 and 100 million coins. This is evidence that large holders are actively distributing XRP. The behavior of the cohort reflects bearish sentiment and adds significant sell-side weight.
Technically, XRP has formed a downward trendline since its September highs. Recent touches on the line, such as on November 13, have triggered sharp declines as large holders deploy. XRP plunged 33% after the highest test.
Currently, XRP explores the make-or-break $0.50 support level, which has seen bullish trend changes in the past. However, based on the current strong bearish signals, an imminent collapse is likely with the next major level at $0.35.
To make matters worse, the Relative Strength Index (RSI) is oversold while XRP is trading below its 50-day and 200-day moving averages. These factors could stimulate bargain buying and create upside, but significant resistance around $0.56 and $0.59 will first stand in the way.
Oversold XRP could see speculators attempting to find a bottom, but the indicator’s aggregate signal, large holder action, and significant technical support levels all warn of continued downside risk. Only a daily close above resistance at $0.56 can provide evidence that the bulls are regaining control.