The cryptocurrency market’s volatility has found a new victim in Ripple’s XRP. The token experiences a worrying 20% pullback from its yearly high, triggering concerns among investors about a potential steeper correction to come.
As traders and analysts observe the token’s performance, questions arise on whether this downward momentum will push XRP toward the critical $2 support level. However, there is hope that this pullback is merely a temporary consolidation following its remarkable 431% rally.
Crypto playbook: Worksport and Ripple’s bold plays
Worksport, a Nasdaq-listed company, plans to invest up to $5 million in Bitcoin and XRP. CEO Steven Rossi highlighted this strategic move to stay ahead of market trends, boost operational efficiency, and create shareholder value. The decision comes after the ongoing legal developments surrounding XRP.
In other news, Ripple’s Vincent Van Code announced that the new RLUSD token won’t replace XRP but will enhance the XRP Ledger’s capabilities. According to his post on X, XRP will continue to serve as the backbone of cross-border transactions on the platform.
This is because the token enables direct currency conversions like AUD to USD with significantly reduced costs and increased efficiency. The XRP Ledger’s innovative auto-bridging and decentralized exchange features make international money transfers hassle-free and more transparent than traditional financial systems.
Technical analysis: The XRP volatile chart signals
Despite some promising recent developments, such as Worksport’s $5 million investment in XRP and Bitcoin and the potential impact of Paul Atkins’ SEC chair nomination, these positive signs may have already influenced the current market price.
Some investors are seriously concerned about XRP’s recent price action, and understandably so. The token trades at $2.35 at press time, down almost 5% in the last 24 hours. Technical analysis of XRP’s chart shows a parabolic upward trend since early November, with the price now showing signs of consolidation around the $1.10 level. The 9-period Simple Moving Average (SMA) at 2.1913 currently serves as a dynamic support.
The Relative Strength Index (RSI) reading of 83.31 indicates that the token falls in the severely overbought range, suggesting a potential correction phase soon. This technical indicator aligns with the concerning 48.45% decline in 24-hour trading volume to $13.74B, hinting at potentially decreasing investor interest. The market capitalization has also taken a hit, dropping 3% to $134.90B.
Source: TradingView
Another concerning aspect is the elevated open interest (OI) levels, which have reached $3.44B—significantly higher than the $2B seen during the 2021 rally. This excessive leverage, combined with the overbought RSI, creates a dangerous environment for potential cascading liquidations.
With analysts projecting potential increases to 60-70% in Bitcoin’s dominance, altcoins like XRP could face significant pressure as capital rotates back into Bitcoin. Lead analyst for Swyftx Pav Hundal warns that this could trigger a “bloodbath of liquidations” for leveraged XRP positions.
Investors should exercise extreme caution in the current market environment, as rapid price movements are always possible. While the future of XRP remains intriguing, the short to medium-term outlook suggests some form of consolidation ahead.
A reasonable price target range for the next few weeks could see XRP testing support levels between $1.80 and $2.00. In addition, further correction may be necessary before any sustainable recovery can occur.
