Key takeaways:
XRP (XRP) price extended the losses from the sharp sell-off last week. The altcoin’s price is down 1.78% over the last 24 hours to trade at $2.78 on Monday.
Risk-off sentiment in the broader crypto market and a decline in onchain activity suggest XRP could remain stuck in a downtrend over the next week or two. However, a reversal could play out if key support levels hold.
XRP investors enter risk-off mode
The Crypto Fear & Greed Index has now dropped into the “fear” zone at 46, down from “neutral” levels seen last week and “greed” over 30 days ago, reflecting growing investor caution, data from Alternative.me shows.
This fear is reflected in declining onchain activity, with the number of active addresses having plummeted over the last few weeks, to approximately 19,250 on Monday from $50,000 in mid-July.
The Active Addresses is a metric that tracks the number of wallets actively interacting with the XRP Ledger (XRPL) by sending or receiving XRP. Therefore, such a significant drop indicates a reduced risk appetite, leaving XRP vulnerable to sell pressure.
Related: XRP ‘distribution’ phase doesn’t change $20 price target: Analyst
Declining investor interest is also evidenced by the significant pullback in the futures open interest (OI) to $7.7 billion from $10.94 billion over the same period.
Diminishing OI implies a lack of investor conviction, possibly increasing the likelihood of the downtrend continuing in the short term.
$2.70 must hold as XRP price support
Despite the weak fundamentals, the technical setup projects a possible rebound if the support at $2.70 holds. Otherwise, an extended drawdown toward $2 could play out.
The XRP price chart has been forming a descending triangle pattern on its daily chart since its July rally to a multi-year high of $3.66, characterized by a flat support level and a downward-sloping resistance line.
A descending triangle chart pattern that forms after a strong uptrend is seen as a bearish reversal indicator. As a rule, the setup resolves when the price breaks below the flat support level and falls by as much as the triangle’s maximum height.
The bulls are struggling to keep XRP above the triangle’s support line at $2.70. If they succeed, the price could rise to break the upper trendline at $3.09, coinciding with the 50-day simple moving average (SMA) and the 0.618 Fibonacci retracement level.
This will confirm bullish momentum and potentially trigger a rally toward the apex of the prevailing chart pattern around $3.70.
Losing $2.70 could trigger another sell-off, with the first line of defense provided by the demand zone between $2.6 (the 100-day SMA) and $2.48 (the 200-day SMA).
A breakdown of this level will see XRP price fall toward the downside target at around $2.08 over the next few weeks, down 25% from current price levels.
The liquidation heatmap shows XRP buyers stepping in at $2.70. Large clusters of ask orders are also sitting between $2.87 and $3.74.
As Cointelegraph reported, XRP’s Moving Average Convergence Divergence (MACD) points to a potentially bearish crossover in September, risking a drop toward $2.17.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
