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A range of technical, fundamental and psychosocial factors show the downside risk of XRP's price after rising more than 8% in the last week to March 13. The price of Ripple XRP could drop as much as 25% in the coming week because of the downward trend over the past several months and the fear surrounding the abundance of XRP.
XRP's Bearish Triangle Model
XRP has remained in the descending triangle pattern since reaching its second high in April 2021 – nearly $1.98. At the same time, XRP/USD has a descending trendline while the support line remains at around $0.55, as in the chart below.
Over the weekend of March 13, the XRP price once again showed that the upper trendline was resistance, causing alarm that the currency would go against the main trend to return to the support line around $0.55, down about 25% to 30%.
The downtrend is also expressed from other bearish factors that appear around the resistance line of the triangle pattern. For example, XRP formed a bearish hammer candlestick pattern on March 12, a candlestick pattern with a small body and long candle shadow, indicating lower buying pressure near the top of the coin within a week at nearly $0.85.
In addition, the price falls lower after testing the resistance zone created by the 20-week EMA (blue wave), and the 50-week EMA (red wave), as in the chart below.
Excessive FUD Supply
The signs of XRP's slide also come after Ripple Labs locked 800 million XRP in escrow as part of its programmed withdrawal plan.
The blockchain payments company shipped about 100 million XRP worth nearly $40 million to trading wallets on March 3. Meanwhile, they hold the remaining 700 million XRP (about $550 million) in a trust account. This raises predictions that at least 200 million XRP will flow into the market to generate capital for Ripple's operating costs, as well as allocate XRP to Ripple's global customers.
The sell-off fears stem from xrp's previous reaction to an unexpected increase in supply. Xrp/USD, for example, fell more than 50% to nearly $0.60 just four months after its Circulating Supply increased from $40.46 billion to more than $47 billion in just two days.
Nonetheless, Ripple's withdrawal of 800 million XRP is not yet reflected in their circulating supply.
Increased Profit Taking Risks
Another factor that suggests xrp price will drop 25-30% to reach its bearish triangle pattern target is the Santiment indicator that tracks the trends of the social network and their impact on trends in the market.
Santiment said xrp's price rose more than 15 percent in the week to March 12, along with the trend on social media looking for hashtags #XRPNetwork rise. This suggests the possibility of an upcoming sell-off: "So far, social trends have shown that taking profits is reasonable every time #XRPNetwork is a hot topic."
