XRP Faces 5% Drop Risk as Selling Pressure Intensifies

XRP, the cryptocurrency associated with Ripple, has been under scrutiny as analysts assess the likelihood of its price dropping by another 5%. Over the past month, XRP bulls have successfully defended the $2 support level, but recent selling pressure has increased, raising concerns about a potential further decline.

Ask Aime: Will XRP's price continue to fall?

XRP's price charts have shown mixed signals, with the cryptocurrency appearing likely to test the $2 support level and bounce higher. However, over the past four days, selling pressure has intensified. Despite a recent legal victory, the bullish case for XRP has not been significantly strengthened. The legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) continues to be a critical factor influencing XRP's price trajectory. The outcome of this dispute could have significant implications for the regulatory status of XRP and its potential for widespread adoption.

Bitcoin's price movements are also closely watched, as they often influence the broader cryptocurrency market. At the time of writing, Bitcoin was testing the $83k support level. If Bitcoin can bounce higher, XRP is likely to follow suit. Therefore, traders should monitor both XRP and Bitcoin trends to gauge the potential for a bullish reversal.

Technical indicators provide additional insights into XRP's price movements. In December, XRP formed a range between $2 and $2.5. Over the past month, the price has reverted to the same support level at $2. The sellers were unable to break this demand zone and force the prices lower, likely due to a lack of overwhelming seller superiority. The Chaikin Money Flow (CMF) indicator has not fallen below -0.05 noticeably in the last three months, signifying a lack of heavy capital flow out of the market until recently. However, over the last ten days, the CMF has begun to trend lower, indicating a recent increase in selling pressure.

The Accumulation/Distribution (A/D) indicator has maintained levels from early March, suggesting a lack of dominant selling pressure. However, it also shows that buyers are hesitant. The Awesome Oscillator indicates a lack of trend and prevalent momentum, further highlighting the market's uncertainty. On the 4-hour chart, the A/D is trending slowly south, the CMF is below -0.05, and the Awesome Oscillator is forming red bars on the histogram, all pointing to increased selling pressure over the past week. XRP has also fallen below the short-term support at $2.225, suggesting a potential move to $2, which would represent another 5% drop.

Whether XRP's price can recover from here is uncertain. The daily chart shows that $2 would likely be defended once again, but the overall market sentiment remains bearish. Buyers should be cautious, but going long could provide profits if managed carefully. A drop below $1.95 would invalidate the idea of a price bounce from $2, and traders could then lean bearishly. The interplay between macroeconomic factors, regulatory developments, and technological advancements within the Ripple ecosystem will continue to influence XRP's price trajectory. Investors and analysts will closely monitor these factors as they assess the potential price movements of XRP.