XRP Faces 50% Correction Risk if Price Drops Below $2

Cryptocurrency trader Ali Martinez has issued an urgent alert regarding XRP, warning that the top-five altcoin is at risk of a sharp correction if it fails to maintain a crucial price level. Martinez's analysis suggests that XRP must stay above $2 to avoid a significant downward move. According to Martinez, if XRP falls below this threshold, it could experience a steep decline, potentially erasing recent gains and dampening investor sentiment.

Martinez's warning is based on on-chain data from blockchain analytics platform Glassnode, which indicates an "air gap" between $2 and $1.60. This gap suggests a weak foundation for XRP around that price zone, increasing the risk of a deeper drawdown if the altcoin fails to hold above $2. At the time of writing, XRP is trading at $2.56, but the market's volatility and regulatory uncertainties pose significant risks.

Martinez's analysis extends beyond XRP to other top altcoins. The layer-1 protocol Solana (SOL) is facing a "big test" at a resistance level a few percentage points above the current price. Martinez highlights that $135 stands as the most important resistance for SOL, and investors in the sixth-largest crypto asset by market cap are capitulating based on the altcoin’s net unrealized profit/loss metric (NUPL). This on-chain indicator measures whether accumulators of a coin are in a state of profit or loss, and SOL’s NUPL is hovering below the zero line, indicating that investors are witnessing losses and in the midst of capitulation. At the time of writing, Solana is trading at $132, down by around 55% from the all-time high price of $293 reached January 20th.

Looking at the top memecoin Dogecoin (DOGE), Martinez notes that the altcoin has recorded significant demand in a week. According to Martinez, over 110 million Dogecoin were bought up in a week, indicating that big players are betting on a breakout. At the time of writing, Dogecoin is trading at $0.173.

Martinez's urgent alert regarding XRP underscores the cryptocurrency's vulnerability to sharp corrections. While recent developments have been positive, the market's volatility and regulatory uncertainties pose significant risks. Investors should exercise caution and stay informed about the latest developments to navigate the complex landscape of the cryptocurrency market effectively. The broader implications of Martinez's warning extend beyond XRP, as the performance of one of the top-five altcoins can influence the overall cryptocurrency market. A sharp correction in XRP could lead to a ripple effect, affecting other altcoins and potentially causing a broader market downturn. Therefore, traders and investors should remain vigilant and consider the potential risks associated with holding XRP.