Home Altcoins News Ripple’s XRP Faces Potential 38% Correction Amid Bearish Momentum

Ripple’s XRP Faces Potential 38% Correction Amid Bearish Momentum

In a recent turn of events, Ripple’s XRP has encountered a substantial downturn, falling to $0.55 on January 18, 2024, with a 12.64% loss in its Year-To-Date (YTD) performance. Analysts, including Ali Martines, express concerns about a potential 38% correction, emphasizing the importance of bulls stepping in to prevent further decline.

Martines points to XRP slipping below its ascending channel, indicating a likely downward movement. The analysis aligns with data from Santiment, a crypto intelligence platform, which highlights the increased risk due to intense profit-taking, with 80% of the total supply in profit.

The historical context provided by Santiment reveals that when the percentage of total supply in profit was similar in April 2023, XRP experienced a significant price drop from $0.53 to $0.42. A similar pattern emerged in August of the same year, raising concerns about the current scenario.

Market speculations regarding a potential XRP exchange-traded fund (ETF) as a saving grace have been circulating. However, recent reports from Fox Business suggest that BlackRock, a major financial institution, has no plans to launch a spot XRP ETF, dispelling hopes of an imminent rescue for XRP.

As of the latest update, XRP has dipped below the crucial support level of $0.55, prompting a closer look at the Directional Movement Index (DMI) for insights into short-term recovery possibilities.

The DMI analysis reveals a bearish stance for XRP, with the -DMI (red) at 26.77 and the +DMI (green) at 14.46. This unfavorable position is further supported by the Average Direction Index (ADX) closing in at 25. If the ADX surpasses this reading while the -DMI remains higher, XRP could face a first stop at $0.50.

Additionally, the Relative Strength Index (RSI) paints a gloomy picture with a reading of 36.18, indicating a challenging environment for XRP in the current market conditions.

Analyst Ali Martines suggests that XRP might face a further decline, potentially dropping as low as $0.34, resulting in a substantial 38% correction. This assessment stems from XRP slipping below an ascending channel, a move that typically indicates a bearish momentum, making a downward chart movement likely.

One contributing factor to XRP’s decline is the intense profit-taking observed in the market. Data from the crypto intelligence platform Santiment reveals that 80% of the total XRP supply is currently in profit. While this percentage has decreased from its historical high of 88%, it still poses a significant risk to the cryptocurrency’s price.

Historical data from April and August 2023 shows that when the total supply in profit was around the same percentage, XRP’s price experienced notable declines. For instance, the price fell from $0.53 to $0.42 within a short period in April 2023. Analysts are closely watching this metric as it could be an indicator of potential price movements in the near future.

Speculation had arisen about the possibility of an XRP exchange-traded fund (ETF) coming to the rescue and preventing a significant correction. This speculation was fueled by remarks from BlackRock’s CEO Larry Fink during an interview with Fox Business. However, recent reports from Fox Business senior correspondent Charles Gasparino suggest that BlackRock currently has no plans to launch a spot XRP ETF, dispelling the earlier rumors.

In conclusion, the fate of Ripple’s XRP hangs in the balance as it grapples with a potential 38% correction. Market indicators, historical data, and expert analyses all point to a challenging period ahead for XRP, underscoring the importance of bullish support to prevent further declines.

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Evie

Evie is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences and express herself through her blogs.

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