Key Insights:
- XRP’s price drop follows Bitcoin’s downturn and rising U.S. Treasury yields, increasing risk-averse sentiment in the market.
- The confirmed death cross on XRP’s daily chart points to ongoing weakness, with further downside likely unless strong buying volume emerges.
- Despite current bearish trends, the Canary Capital XRP ETF could revive investor interest, potentially pushing XRP above key resistance levels.
XRP’s price has dropped significantly, following a confirmed bearish pattern on the daily chart. The cryptocurrency’s value plunged 7% to an intraday low of $2.27 on Friday, later recovering slightly to $2.32. This decline reflects broader market trends, particularly the weakening investor sentiment across the crypto space.
The drop in XRP’s price is part of a larger downturn in the crypto market, which was triggered by Bitcoin’s fall below $97,000. This is a level Bitcoin hadn’t touched since May 2023, further driving negative sentiment. Additionally, rising U.S. Treasury yields have also played a key role in dampening investor enthusiasm for riskier assets like cryptocurrencies. As government bond yields increase, investors typically move capital away from volatile assets like XRP into more stable options.
Derivatives Market Signals Waning Confidence
The decline in XRP’s price is further compounded by weakening activity in the futures market. Data from CoinGlass indicates that open interest has dropped to $3.63 billion, significantly lower than the $8.36 billion seen earlier this month. A reduction in open interest suggests that traders are closing positions and retreating from the market, signaling a lack of confidence in the current trend. This shift in sentiment is also reflected in the long/short ratio, which stands below 1 at 0.88. More traders are betting on further downside, adding to the negative outlook for XRP.
Technical analysis of XRP’s daily chart confirms a death cross, a pattern that occurs when the 50-day moving average falls below the 200-day moving average. Historically, death crosses have been followed by extended periods of weakness, with market momentum shifting in favor of sellers. Additionally, XRP has been trading within a descending parallel channel since mid-July, reinforcing the bearish outlook. This pattern suggests that rallies are likely to face strong resistance and could be met with selling pressure near the upper boundary.
Support Levels and Potential for Recovery
Despite the overall bearish sentiment, XRP does have some support at the $2 mark, which aligns with the 50% Fibonacci retracement level. If this support holds, it could provide a foundation for price stabilization. However, if it breaks down, XRP may slide further toward its June low of $1.90. On the flip side, the recent launch of the Canary Capital XRP ETF could spark renewed interest. The ETF generated $58 million in trading volume on its first day, and if this momentum continues, it could push XRP toward the $2.58-$2.65 resistance zone.
