XRP's potential plunge to $2.4 if its current support collapses explained
In the ever-evolving world of cryptocurrencies, Ripple's XRP finds itself in a challenging position as it grapples with market weakness and a dominant taker sell phase.
Bitcoin's drop below $110k has hinted at a broader market weakness, and this trend seems to be affecting XRP as well. The digital asset has been defending the $2.74 support level, but a drop below could lead XRP lower to $2.4, according to recent analysis.
The bearish sentiment in the market is threatening a bearish trend for XRP. This is evident in the XRP market-wide outlook, which has shown taker sell dominance since late July, as per CryptoQuant. The spot and futures taker CVD has been negative over the past month, indicating a strong selling pressure.
The futures market also reflects this taker sell-dominant phase for XRP. The CME Open Interest hit a record recently, but a bullish scenario has yet to unfold. The futures taker CVD over 90 days has been negative since late July.
The Open Interest (OI) has been in a downtrend since the end of July, particularly over the past two weeks. This indicates a decrease in the number of open positions, which could be a sign of traders exiting their positions due to the bearish sentiment.
The cost basis distribution heatmap highlights $2.8 as a key level. This suggests that a significant number of XRP holders bought their coins around this price, and a drop below this level could lead to panic selling.
However, it's not all doom and gloom for XRP. The Estimated Leverage Ratio (ELR) indicates that the market is not dangerously overleveraged, reducing the threat of violent liquidation cascades. This suggests that the market may be more stable than it appears.
The August low at $2.74 is vital as a support level. If XRP can hold above this level, the bearish situation may be salvageable. The 12-hour structure is bearish, but the MFI (Money Flow Index) is dropping, suggesting that the selling pressure may be easing.
The current identity of the author reporting on these negative developments in XRP is Philipp Henk, a freelance author and analyst in the crypto and finance sector since 2020, regularly publishing with Bitcoin2Go since 2022.
In conclusion, while the XRP outlook remains bearish, there are signs that the selling pressure may be easing. As long as XRP remains above the crucial support levels of $2.74 and $2.6, there is hope that the bearish situation may be salvageable.
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