XRP is exhibiting further downside as the whole digital currency ecosystem is in turmoil. The risk-off sentiment is escalating following the drop in Bitcoin to levels below $90K, and Ethereum is below $3K. Major tokens are experiencing rapid selloffs as a result of a liquidity and fear-driven appetite shift. In this context, XRP is not decoupling from the overall negative trend experienced in the crypto market.
In the absence of a crypto-specific bullish sentiment, XRP price patterns are following other major market tokens as Ethereum and Bitcoin cross major psychological support levels. This trend underscores the fact that XRP is primarily driven by liquidity in the market, and not the performance of the token, the ecosystem, or other on-chain metrics. The rapid contraction in liquidity continues to amplify the pressure on the price of the token, leaving little to no space for any meaningful recoveries to take place.
Accumulation of these sell pressures on the downside are further exacerbated by the continued distribution of tokens by large ‘whale’ players. In the last month, large XRP holders dumped 1.18 billion tokens and increased the circulating supply of XRP tokens.
This kind of sustained selling is not typical of market volatility, and foreshadows the absence of support for further token selloffs. When these whales sell tokens, the supply of the token is increased at a rate much faster than the market is likely to consume. This outer balance leads to price disequilibrium.
This selling pressure coincided with a severe market-wide liquidation event. Over a single hour, the crypto market dropped over an additional 23 billion, totaling 127 billion in the last 24 hours. This sudden liquidity drain in the market intensified declines in major assets, XRP included. When ‘whales’ sell in rapid succession, price declines tend to accelerate as support zones fail to hold.
This price action on selling XRP meant breaking the support of the previously defended levels with an attempt to rebound in a strong move only to be deflected. The continual inability to support recoveries chassis a lot of sellers bear fronts to weight, meaning supply pressure was still further cutting opportunistic dip buyers. Historically, the snap of a heavy whale distribution sequence heavily precedes these longer corrective phases, a pattern currently very well engraved into the price action of XRP.
From a purely technical standpoint, XRP’s market structure echoes a surrounding bearish sentiment. A well known head and shoulders pattern appears to be present on the daily chart, showing erosion of buyer stronghold. The left shoulder was formed during a recovery, the head formed during a brief selloff and move formation in the price. During the head formation, the price found no upside demand and was kept in check from below by sellers.
The right shoulder pattern confirmed this weakness, as buyers lost the ability to reclaim previous support zones. The critical neckline support around the $1.95 mark was breached, leading to a sharp deterioration in selling pressure. XRP now trades at $1.87, below previously consolidated zones which are now acting as resistance.
Additional momentum indicators support the bearish outlook. The RSI remains depressed at 33, with no upward bounce expected towards neutral. This ongoing weakness is mostly the symptom of a power vacuum selling remains in control. On the downside the hsv pattern suggests that dollar will trade $1.50.
The selling dominance of XRP remains profound due to the selling pressure of crypto whales, which is compounded by the market wide weakness. The bearish development of XRP suggests that further bearish selling pressure remains elevated, leading the previously established support to be lost, while the previously established selling zones remain.
