Will XRP's price plunge again? Key monitoring of the altcoin market
For the first time since January 2018, XRP's price broke through the $2.90 high, but fell more than 25% in just three weeks, dropping to a low of $2.13 on December 23.
The main reason for this price drop is the overbought status of XRP triggering profit-taking, combined with the Federal Reserve's shift to a hawkish stance that heightened market unease.
XRP: Facing a 15-20% downside risk in December
Since the beginning of December, XRP's price has been consolidating within the Fibonacci retracement range. According to technical analysis, XRP's resistance level is at the 1.618 Fibonacci level (around $3), while the support level is at the 1.0 Fibonacci level (around $1.98). As of December 23, XRP failed to break through the $3 resistance level and entered a correction phase.
It is expected that by the end of December, XRP may retrace to the support level of $1.98, about 15% lower than the current price.
Technical aspect: Overbought condition enhances bearish risk
XRP's relative strength index (RSI) remains above 70, indicating that the market is in an overbought condition. Overbought signifies that the recent upward trend may slow down or even reverse.
Whale distribution changes: XRP whales reducing holdings
At the same time, the holding behavior of XRP whales is also noteworthy. Addresses holding at least 1 million XRP saw a significant decrease in December, coinciding with XRP's consolidation phase.
Whale sell-offs typically indicate that significant investors are taking profits or exiting, which could lead to an increase in XRP supply in the market. If there is not enough buying demand, it could exert downward pressure on the price.
Descending triangle pattern: A warning for further downside
The daily chart of XRP shows a descending triangle pattern, indicating a potential bearish reversal in the future. This pattern typically occurs in an uptrend and suggests that the price may face a downturn.
Currently, XRP's horizontal support level is around $2.19, while the trend line is continuously descending. If XRP breaks below the $2.19 support level, it may confirm the descending triangle pattern, leading to further price declines. According to the technical target of this pattern, XRP could drop to $1.69, which aligns with the 50-day exponential moving average (50-day EMA, red wave).
Potential rebound for XRP: Bullish flag suggests future gains
Despite the short-term downside risks, the consolidation of XRP may also pave the way for a price recovery. Some analysts believe that the current consolidation phase of XRP could form a bullish flag pattern, with expectations that by January 2025, XRP's price will soar to $3.50, an increase of about 60% from the current level.
This bullish expectation is supported by optimistic fundamentals, such as the potential conclusion of the SEC's lawsuit against Ripple, and the launch of an XRP spot exchange-traded fund (ETF) may also boost market sentiment.
