XRP Experiences Bearish Downtrend: A Deep Dive into Price Drops and Market Sentiment

XRP, the native cryptocurrency of the Ripple network, has been on a consistent downtrend since reaching its all-time high of $3.40 on January 16. Currently trading at around $2.18, XRP has witnessed a significant 35% price drop over the past two months. This prolonged decline has raised concerns among traders and investors, as it signals a downturn in the market’s sentiment and an erosion of XRP’s value.

A Prolonged Decline: Price Performance and Market Sentiment

XRP’s performance has been under heavy bearish pressure since its price peaked earlier in the year. The sharp decline of 35% is not just a fleeting dip but marks a broader trend of decreased market interest and a shift in investor sentiment. As the price slides, the number of XRP tokens held in profit has also diminished, contributing to a general sense of pessimism surrounding the altcoin.

On-chain data reveals that bearish sentiment is on the rise, signaling that the price could continue to fall in the coming weeks. This price correction has not only impacted XRP holders’ profits but has also led to a significant shift in market dynamics, as demand for the token has started to wane.

Drop in XRP’s Total Supply in Profit

The latest on-chain data from Santiment shows that XRP’s total supply in profit has significantly dropped. Over the past week, the total supply in profit has reduced by 6.39 billion XRP tokens, marking a new year-to-date low. As of the most recent data, only 87.95 billion XRP tokens out of a total supply of 99.98 billion are in profit.

This reduction in tokens held at a profit is a key indicator of the growing bearish sentiment around XRP. It signals that a growing portion of the investor base is now sitting on losses, which naturally contributes to increased selling pressure. In the world of cryptocurrency, when investors see their assets in the red, they may be more inclined to sell, further driving down the price. This dynamic highlights the intensifying pressure on XRP’s value and reinforces the negative market sentiment surrounding the asset.

New Demand Slump: Declining Interest from New Investors

As XRP’s price continues to fall, new demand for the token has also started to slow down significantly. According to Santiment, the number of new wallet addresses created for XRP trades saw a steep decline this month. On Sunday, only 4,516 new wallet addresses were created, the lowest daily count of new demand for XRP since the beginning of the year.

The drop in new wallet addresses is a concerning sign for the token, as it suggests that fewer investors are entering the market. When new demand wanes, it often leads to a reduction in trading activity, diminishing price support in the spot market. This reduction in buying pressure, combined with the increasing selling pressure from holders who are underwater, creates a perfect storm for further declines in the price of XRP.

New demand is a critical component for any asset’s long-term growth. Without the influx of new buyers, a token may struggle to regain its previous levels of value, especially if it continues to face downward price action. The continued slowdown in XRP’s new demand points to a weakening market interest and suggests that the coin’s price may not have reached a bottom yet.

The Bearish Technical Picture: Descending Trendline and Growing Selling Pressure

From a technical analysis perspective, XRP has been consistently trading below a descending trendline since it reached its all-time high in January. A descending trendline is formed when an asset’s price consistently creates lower highs over time, indicating that sellers are in control of the market. This pattern suggests that unless the price breaks above this trendline, further declines are likely.

As of the latest price action, XRP is trading at $2.17, significantly below the descending trendline. This ongoing bearish momentum suggests that the price may continue to fall in the near future. If the token breaks further below its current support levels, it could potentially drop to the $2 mark, and in an extended bearish scenario, the price could slide to as low as $1.47.

XRP Price Analysis | Source: TradingView

A further drop to $1.47 would mark a substantial decline from XRP’s recent highs, potentially causing significant losses for investors who bought in at higher price points. Such a drop would intensify the prevailing pessimism in the market and could lead to more investors exiting their positions. The growing bearish bias surrounding XRP implies that further downside risk cannot be ruled out unless the market sees a substantial shift in sentiment.

The Potential for a Reversal: What Will It Take for XRP to Break the Trend?

Despite the ongoing bearish sentiment, there is still a glimmer of hope for XRP. If buying pressure were to increase, the token could break above its descending trendline and reverse its downward trajectory. A break above the trendline would indicate a shift in market sentiment, potentially attracting more investors and encouraging more buying activity.

In this scenario, XRP’s price could climb to around $2.93, signaling a potential recovery and a move towards higher levels. However, this would require a significant change in market sentiment, with buyers coming in to drive the price up. For now, the market is showing a pronounced preference for selling, and any recovery may be short-lived unless there is a dramatic shift in investor behavior.

: Is XRP Ready for a Rebound, or Will the Downtrend Continue?

XRP has faced a sharp price decline over the past two months, with a 35% drop from its all-time high in January. This downtrend is reflective of growing bearish sentiment in the market, as indicated by the decreasing number of XRP tokens held in profit and the reduction in new demand for the asset. The technical picture for XRP is also concerning, as it continues to trade below a descending trendline, suggesting that further declines could be on the horizon.

The drop in new demand and the increased selling pressure from holders sitting on losses highlight the challenges XRP faces in the near term. However, the possibility of a reversal remains, as a shift in market sentiment could lead to a break above the descending trendline and a price recovery.

For now, the market remains uncertain, and XRP’s price trajectory will largely depend on investor sentiment, new demand, and broader market conditions. Without a significant increase in buying pressure, XRP could continue to face downward price movement, potentially testing lower support levels in the near future. Investors will need to remain vigilant, closely monitoring price action and market sentiment to gauge the potential for a rebound or further declines.