XRP, the third-largest cryptocurrency by market capitalization, is currently facing a significant risk as its price shows signs of a potential breakdown below the crucial $2 mark. After days and weeks of fluctuating around $2, the price is now in a downtrend, with consecutive lower highs on its daily chart, signaling possible bearish momentum.

As of now, XRP is trading at $2.084, but the chart suggests that it may soon breach the $2 threshold. The reasons behind this decline are tied to the technical structure of its price action, particularly the position of the 200-day moving average, a key price curve that many traders and analysts pay close attention to. This moving average currently sits at around $1.84 and is acting as a magnet for the price, pulling XRP closer toward it. Historically, the 200-day moving average has served as a crucial level for price reversion or continuation, and the current price action is likely to test the strength of buyers in this area.

A drop to this level would be critical for XRP, as it may trigger stop-loss orders and test the commitment of its buyers. This scenario is reminiscent of what happened earlier this year in February when XRP experienced a sharp 30% drop in a single day. The price plummeted from $2.79 to $1.768, causing significant losses for short-term holders. However, after that rapid decline, the price managed to recover, reaching the high $2s again. The key question now is whether a similar recovery will occur this time, or if the price will break below the 200-day moving average and continue its downtrend.

The psychological level of $2 has been an important point of support for XRP over the past few months. Since December 2024, the price has tested this level seven times, and each time it held above the $2 mark. This consistent support level has attracted buyer interest, but the big question is whether this buying pressure will be enough to prevent further downside if the price breaks through it. If buyer interest falters and there isn’t enough demand to absorb potential selling, XRP could see a more significant drop.

Another important factor to consider is the broader market sentiment. As the cryptocurrency market continues to experience fluctuations and volatility, altcoins like XRP are not immune to the broader market trends. Bitcoin and other major cryptocurrencies have also seen significant price corrections in recent weeks, and XRP’s price action is reflecting some of these larger trends. If the market continues to show bearish sentiment, XRP may struggle to regain upward momentum, especially if support levels such as the 200-day moving average fail to hold.

XRP’s price is currently at a crossroads, and how it reacts to the critical $2 level and the 200-day moving average will likely determine the next phase of its price action. A sustained break below this level could signal a deeper bearish trend, while a rebound and hold above the $2 zone could indicate that buyers are still in control, potentially paving the way for a recovery.

In conclusion, XRP is at a crucial point in its price action. The 200-day moving average is acting as a key level, and how the market reacts to it will determine whether XRP will continue its downtrend or find support and make a recovery. Traders and investors will need to monitor the situation closely, as the next few days and weeks could be pivotal in shaping XRP’s future price trajectory.