XRP has been under significant selling pressure recently, experiencing a sharp decline of over 12% in the past week. The cryptocurrency has not only faced a price drop but also a troubling collapse in on-chain activity, raising concerns about its ability to maintain key support levels. With bearish technical indicators and weakening network engagement, the outlook for XRP remains increasingly grim, unless sentiment shifts swiftly.

Bearish Momentum Strengthens

XRP’s Directional Movement Index (DMI) is signaling strong bearish trends, with the Average Directional Index (ADX) reaching a concerning level of 47.14, a significant spike from 25.43 the previous day. The ADX is a technical indicator that measures the strength of a trend, and values above 25 indicate a trend gaining momentum. When the ADX surpasses 40, as it has in XRP’s case, it confirms that a very strong trend is in play. Unfortunately for XRP, this trend is downwards, reinforcing fears of continued declines.

The components of the DMI—+DI and -DI—also paint a bleak picture for the altcoin. The +DI, which measures upward price pressure, has fallen sharply from 20.13 to 5.76, suggesting that bullish sentiment is quickly evaporating. On the other hand, the -DI, which tracks downward pressure, has surged from 8.97 to 33.77. This divergence between the two indicators confirms that sellers are dominating the market, while buyers struggle to gain traction.

With the ADX showing rising momentum and the directional indicators heavily leaning towards the downside, XRP’s price is expected to remain under pressure in the near term unless a significant reversal in sentiment occurs.

Active Addresses Plunge

Another troubling sign for XRP comes from its on-chain activity. Over the past week, the number of active addresses on the network has seen a dramatic decline. On March 19, the active addresses metric reached an all-time high of 1.22 million, signaling strong network engagement and investor interest. However, since then, this number has dropped precipitously to just 331,000, a decline of more than 70%. This sharp fall in network activity suggests that user interest in transacting on the XRP network has cooled significantly in a short period.

Active addresses are a crucial metric to gauge a cryptocurrency’s overall network health. A rising number of active addresses typically indicates increasing demand and user participation, which can support price strength. Conversely, a sharp drop, like the one XRP is currently experiencing, suggests weakening momentum and fading interest, which could exacerbate price declines. Unless network engagement picks up again, this decrease in active addresses may continue to drag XRP’s price lower.

Support Levels at Risk

XRP’s technical indicators also reflect its current downtrend. The Exponential Moving Averages (EMAs) have formed a bearish alignment, with short-term EMAs positioned below the longer-term ones. This setup typically signals a weakening of price momentum, often seen during sustained corrections. If XRP fails to regain upward momentum, it could face a retest of its key support level at $1.90. Should this level break, XRP could see a deeper drop toward $1.77.

However, a shift in market sentiment could change the course of XRP’s price action. If the cryptocurrency manages to reverse its downtrend, it could initially target resistance at $2.22. A successful breakout above this level could trigger renewed bullish momentum, pushing the price towards $2.47 and even $2.59.

Conclusion

XRP is facing significant challenges as it battles a strong downtrend, declining active addresses, and weakening market sentiment. The rising bearish momentum and the risk of falling below critical support levels make it hard to be optimistic in the short term. Unless there is a major shift in sentiment or a resurgence in on-chain activity, XRP may continue to struggle, potentially testing new lows in the coming weeks. Investors and traders alike should remain cautious and keep a close eye on any developments that could signal a potential reversal in the altcoin’s fortunes.