XRP, the popular cryptocurrency, continues to experience a downward trend, with Jan. 23 being no exception. On this day, the price of XRP dropped by more than 4% to $0.50. The decline can be attributed to both technical factors and market sentiment.
From a technical perspective, XRP’s decline is part of a larger downtrend that typically begins when the price tests a descending trendline resistance that has been in place for several months. The chart below illustrates this trendline.
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The most recent test of this trendline occurred on Dec. 28, and since then, the price of XRP has fallen by approximately 25%. As of Jan. 23, XRP is approaching another important technical level – a multi-month ascending trendline support. Historically, this support level has marked the beginning of significant recoveries in the past.
Currently, XRP shows bearish momentum, with the price trading below key moving averages and the RSI indicating potential oversold conditions. This may attract buyers who are looking for a bargain at current levels.
In addition to technical factors, XRP’s price decline is also influenced by the buzz surrounding the potential launch of a spot XRP exchange-traded fund (ETF) in the U.S. There were hopes that BlackRock, the world’s largest asset manager, would launch such an ETF. However, these expectations were dashed on Jan. 18 when the firm clarified that it had no plans to do so. This news caused XRP’s price to drop by over 13%.
Another factor impacting investor sentiment is the ongoing legal disputes between Ripple, the company behind XRP, and the U.S. Securities and Exchange Commission (SEC). The SEC has demanded financial statements from Ripple and a lawsuit is scheduled for April 2024. This regulatory uncertainty has likely dampened investor enthusiasm and contributed to the recent sell-off.
Furthermore, there has been a decrease in the supply of XRP held by the wealthiest investors. In January, the supply held by addresses with balances ranging from 100 million to 1 billion tokens decreased, while the supply held by investors with balances between 10 million and 100 million tokens increased. This suggests that the larger holders have been actively selling or redistributing their XRP holdings.
It is important to note that this article does not provide investment advice or recommendations. Investors should conduct their own research before making any decisions.