XRP Price Flashes 4 Warning Signs
XRP (XRP) bulls should support possible bearish periods in the coming weeks. At least four indicators, including technical, fundamental and on-chain metrics, hint at a downside ahead.
XRP price bear flag setup
The first indicator that suggests a possible fall for XRP is a bearish flag pattern.
A bear flag is a bearish continuation pattern characterized by a slightly upward sloping rectangle with parallel lines to an existing downtrend. A resolution is found when the price decisively breaks below the lower trend line and falls to the current bearish height.
In the year Since January 30, XRP has been cautiously hovering in the downtrend of a bear flag, indicating a potential breakout. Similarly, the weekly Relative Strength Index (RSI) stands at around 40, with neutrality indicating a possible further decline in the market.
Therefore, a critical break below the flag's lower trendline threatens to send XRP down by $0.24 — a 55% drop from its current price level — in May and June.
XRP whales are dropping.
According to data from Whale Alert, XRP is on the brink of a bear flag collapse, with hundreds of millions of dollars of XRP flowing into Bitstamp and other crypto exchanges.
That includes Ripple's transfer of $24.75 million worth of XRP tokens to an anonymous wallet on January 30. This transfer may be part of Ripple's regular operations, which include releasing tokens from escrow each month.
The timing of these significant transfers of XRP to exchanges is noteworthy as it coincides with a significant shift in the distribution of XRP holdings.
In particular, there is a significant decrease in the XRP stock of whales who hold between 100 million and 1 billion tokens (tidal wave).
Following a decline in XRP holdings among the group holding 100 million to 1 billion tokens, there is a corresponding increase in supply controlled by the group holding 10 million to 100 million XRP (red wave).
This implies the sale or redistribution of XRP holdings by whales.
Death cross, head and shoulders collapse
XRP's selloff risks a further spike in the short-term due to mixed double-bearer technical configurations.
First, XRP's 50-day moving average (50-day EMA; red wave) may cross below the 200-day EMA (blue wave), forming the so-called “death cross” – a sign of doom by traditional traders and analysts.
For example, a death cross on XRP's daily chart in December 2021 was preceded by a 65% price drop, as shown below.
Second, XRP is painting a Head-and-Shoulders (H&S) pattern on the daily chart.
H&S is a bullish-to-bearish trend reversal pattern, with a high (shoulders), followed by a higher high (head) and another low high (shoulders) – all based on a common support line called the neckline.
Analysts measure H&S's price target by calculating the maximum distance between the top of the head and the neckline and extending downwards from where the price breaks on the neckline.
Applying the same technical rule to XRP's H&S reduced the price target to $0.34 for March and April, a 30% drop from the current price level.
There is no XRP ETF in sight.
Analysts are not too optimistic about an XRP exchange-traded fund (ETF) happening anytime soon, which could weaken demand for XRP alongside Bitcoin (BTC) and Ether (ETH).
The ongoing litigation between Ripple and the US Securities and Exchange Commission is a major factor in the absence of XRP futures ETFs in the United States.
Related: Wealth linked to fines, SEC says in Ripple's financial crisis
CoinShares head of product Townsend Lansing told Cointelegraph that in order for the XRP ETF to be implemented, the SEC would have to agree that XRP is not a security, which is unlikely at the moment.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
