XRP has been facing significant bearish pressure, with the cryptocurrency down nearly 30% in the past 30 days and trading below $3 for most of February. Recent trends in market indicators suggest the continuation of this downtrend, but there are potential signs of a reversal if key factors align in XRP’s favor.

Strong Downtrend Indicators

The Directional Movement Index (DMI) for XRP shows that the Average Directional Index (ADX) has surged to 36.98, indicating a strong downtrend. An ADX reading above 25 signals a strong market trend, and with the ADX well above this threshold, it suggests that the bearish momentum for XRP could persist.

Additionally, XRP’s +DI, which tracks bullish momentum, has fallen, while the -DI, which measures bearish momentum, is still higher, maintaining the downtrend. For a trend reversal, the +DI needs to surpass the -DI, signaling that bullish sentiment could return.

Active Addresses Show Recovery

Despite the bearish price action, there has been an uptick in XRP’s network activity. The number of 7-day active XRP addresses fell sharply from 407,000 in January to about 186,000 in mid-February, signaling waning investor interest. However, this figure has started to recover, reaching 236,000, which represents a 26.8% increase in the past week. Rising active addresses often precede price recoveries, as increased participation can lead to greater demand for the token. If this upward trend in network activity continues, it could support a rebound in XRP’s price.

Key Support Levels and Potential Drop Below $2

XRP’s price has been consistently trading below the $3 mark since February 1, and the current setup of its exponential moving averages (EMAs) suggests further bearish momentum. Short-term EMAs are below the longer-term EMAs, confirming that the market sentiment remains negative.

XRP is currently testing two key support levels at $2.15 and $2.06. If these levels are breached, the next major support could be at $1.77, potentially pushing XRP below $2 for the first time since November 2024. While the current trend is bearish, a significant shift could occur depending on upcoming developments.

The SEC Lawsuit and Potential for a Reversal

A key factor influencing XRP’s price movement is the ongoing lawsuit between the U.S. Securities and Exchange Commission (SEC) and Ripple. If the SEC were to drop its case against XRP in March, it could trigger a reversal in market sentiment. In recent months, the SEC has dropped lawsuits against several other major crypto firms, signaling a possible shift in regulatory pressure.

If the lawsuit were dismissed, XRP could experience a rally, testing resistance levels at $2.36, $2.52, and potentially moving towards $2.71. Such a reversal would mark a significant shift in the market’s outlook for XRP.

Conclusion

XRP is currently facing a strong bearish phase, with persistent downtrend indicators and price testing key support levels. However, growing active addresses and a potential favorable outcome in the SEC lawsuit could catalyze a reversal in the coming weeks. Traders should watch closely for any significant changes in the regulatory landscape and key price levels, as these will determine whether XRP drops below $2 or rebounds in March 2025.