Despite recent developments in Ripple's legal battle with the SEC, XRP still faces challenges. A prominent analyst predicts a 43% drop if the price falls below a certain threshold. What do on-chain signals and technical analysis indicate about this situation?
Ripple (XRP) failed to decisively break the $2.5 threshold despite recent positive news regarding its lawsuit with the SEC. The cryptocurrency remains stuck in its first-quarter downtrend and has lost 30% from its all-time highs of $3.4.
Renowned chartist analyst Peter Brandt projected that the altcoin could plummet by 43% if it slides below $1.9. He mentioned the bearish formation of a head and shoulders pattern, which, if validated, would target $1.07.
“$XRP is forming a textbook head and shoulders pattern. We are now in a trading range. Above 3,000, I would not want to be short. Below 1.9, I would not want to own it. The head and shoulders pattern projects to 1.07.”
Some on-chain signals also paint a weakened outlook. On a weekly average, the number of active addresses on the XRP Ledger has dropped by 62%, decreasing from 74,000 users at its peak in December to 28,000 in March.
According to Santiment’s MVRZ score, which tracks if an asset is overvalued or undervalued relative to its price, XRP was still relatively overvalued at current levels. The indicator stood at 2.8, meaning long-term holders had a latent gain of 2.8X to 6X and could potentially take profits, putting pressure on XRP.
However, the accumulation level observed over the last seven trading days did not support the bearish inclination. According to Coinglass data, $43 million worth of XRP was withdrawn from exchanges this week. In total, $290 million worth of XRP left exchanges in March, indicating some players anticipated further rally. Will their bullish bets pay off?
From a chart perspective, key support levels to watch before Brandt’s target were $2 and $1.4. Additionally, price action remained above the 200-day Moving Average (DMA) in red, indicating XRP’s bullish market structure remained intact, at least at the time of writing.
However, there is a bearish divergence in the daily RSI, with a lower RSI despite a higher price on January 18th.
While on-chain signals and technical analysis raise concerns, XRP’s bullish market structure still seems intact. However, Peter Brandt’s bearish forecast should not be ignored as a break below $1.9 could trigger a 43% drop to $1.07, which aligns with the next demand zone (in red). XRP investors will need to closely monitor market developments in the coming weeks.
Ripple’s token (XRP) is available on Weex, an exchange perfect for investors of all levels. Here’s a handy guide to buying XRP in a few simple steps:
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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