XRP, the cryptocurrency associated with Ripple, has been battling the $2 support level for the past month. Despite some early signs of resilience, a fresh surge in sell volume could threaten to push XRP’s price below this critical threshold, potentially triggering a 5% drop in value. With mixed signals across its price charts and increasing market uncertainty, traders are left wondering whether the bulls can hold on or if the bears will take control.

A Strong Defense of the $2 Support Level

Over the past month, XRP’s price has consistently held the $2 mark, showing that the bulls have been actively defending this support level. The cryptocurrency has not fallen below this key price point, and several technical indicators suggest that buyers are still in control. This trend has been aided by a relatively steady capital flow into the market, as indicated by the Chaikin Money Flow (CMF) indicator, which had not dipped significantly below the -0.05 threshold in the last three months.

However, recent developments have started to shift the balance. Sell pressure has been mounting, particularly over the past week, raising concerns that XRP could face a decline. A recent drop in the Awesome Oscillator, which measures market momentum, suggests that there is a lack of buying interest, even as the price approaches a familiar support zone at $2.

Legal Victory Fails to Boost XRP

Despite a favorable legal ruling for Ripple in its ongoing case with the U.S. Securities and Exchange Commission (SEC), the bullish momentum many hoped for has been somewhat muted. The legal win was expected to give XRP a major boost, but the market’s response has been underwhelming, leaving traders questioning whether the altcoin can break free of its current bearish trend.

This lack of momentum is not just limited to XRP. Bitcoin (BTC), the market leader, was also facing a significant test at the $83,000 support level at the time of writing. If BTC can manage a strong bounce from this support, it could help lift XRP along with it, as cryptocurrencies often move in tandem. However, if Bitcoin fails to regain strength, the outlook for XRP could turn even more bearish.

Technical Indicators Signal Bearish Pressure

Looking at the price charts, there are a number of signals indicating increasing bearish pressure. On the daily chart, the indicators appear to be flashing mixed signals. Although the price is testing the $2 support, a deeper analysis reveals that sellers have started to take control. The Accumulation/Distribution (A/D) indicator, which tracks the overall flow of capital into and out of an asset, has begun to trend downward. This suggests that selling pressure has been increasing, despite the lack of a significant breakout in volume.

On the 4-hour chart, the bearish signals are more pronounced. The A/D indicator is moving lower, the CMF has dipped below -0.05, and the Awesome Oscillator is showing red bars on its histogram, all of which point to growing selling pressure. These indicators collectively suggest that XRP may not only test the $2 support but could break through it, leading to a 5% drop or more.

What’s Next for XRP?

While the $2 support level has held strong for now, traders are wary of the growing bearish momentum. The recent failure of XRP to gain ground despite positive legal news and Bitcoin’s own struggles have created a climate of uncertainty. If XRP continues to struggle around the $2 mark, the likelihood of a dip becomes more significant.

For traders looking to enter the market, caution is advised. The possibility of a 5% drop means that it could be risky to go long without proper risk management. A further decline below the $2 support could lead to a move toward the next lower level, around $1.95, at which point the bearish trend may become even more entrenched.

Conversely, if XRP manages to stabilize and hold above $2, there could still be an opportunity for a bounce, especially if Bitcoin’s price recovers. In that case, traders could look to go long, but they should keep a close eye on the market for any signs of a reversal.

Monitoring the Market: Key Levels to Watch

For anyone trading XRP, there are a few critical levels to keep in mind:

• Support at $2: This has been the key level for the past month. A drop below this price point could indicate a further downward trend, possibly pushing the price towards $1.95 or lower.

• Resistance at $2.25: XRP briefly fell below this level, indicating that a short-term resistance has formed. If the price manages to break back above this level, it could signal that the bulls are reasserting control.

• Bitcoin’s $83k Support: As Bitcoin goes, so often does the rest of the market. If Bitcoin manages to hold its $83k support and rally, XRP could follow suit, providing relief to traders.

Final Thoughts

As the XRP market faces mounting selling pressure and a difficult battle for the $2 support, traders must remain vigilant. While the potential for a 5% drop is real, especially with the bearish indicators present on both the 1-day and 4-hour charts, the overall trend will depend on Bitcoin’s performance and any further developments in Ripple’s legal battle. For now, it’s a waiting game for XRP traders, with caution being the key to navigating the uncertain waters ahead.