A combination of technical, fundamental and social sentiment indicators spell downside risks for XRP price
The XPR price is at risk of a more than 25% drop in the coming weeks due to a multi-month bearish setup and concerns surrounding an oversupply of XRP.
Three reasons why XRP price could drop 25%–30% in March
XRP has been consolidating inside a descending triangle pattern since topping out its second high to date – near $1.98 – in April 2021. In doing so, the XRP/USD pair has left a string of lower highs above its upper trendline while finding solid support around $0.55.
XRP/USD weekly candle price chart | Source: TradingView
During the week ending March 13, the price of XRP once again tested the upper trendline of the triangle as resistance, sparking warnings that the coin could undergo another reverse move to the next level. The pattern’s support trendline is near $0.55, down 25% to 30%.
The bearish outlook also takes cues from other bearish catalysts around the triangle resistance.
In addition, the price turned down after testing the confluence of resistance levels identified by the 20-week exponential moving average or the 20-week EMA (green wave) and the 50-week EMA (red wave), as indicated in the picture attached image below.
More unfavorable signs for XRP come after Ripple Labs locked 800 million XRP in escrow as part of its programmed withdrawal schedule.
The blockchain payments company moved around 100 million XRP worth nearly $40 million to a wallet exchange on March 3. Meanwhile, it kept another 700 million XRP (worth around $550 million) in the account, raising predictions that at least 200 million XRP will be flooded into the market to fund Ripple’s operating expenses, as well as to distribute XRP among Ripple’s global customers.
The sell-off concerns stemmed from the previous reaction of the XRP price to an unexpected increase in supply. For example, XRP/USD fell more than 50% to nearly $0.60 in four months after its net supply in circulation increased from 40.46 billion to over 47 billion in just two days. However, Ripple’s withdrawal of 800 million XRP has yet to reflect its net circulating supply.
Another catalyst that suggests the price of XRP could drop 25-30% to reach the descending triangle target is the Santiment indicator that tracks social media trends and their impact on market trends.
XRP price versus XRP Network trend | Source: Santiment
Santiment notes that the price of XRP has increased by more than 15% from the previous week on March 12, coupled with a spike in social media searches for the XRP Network hashtag, suggesting that it could be next with a potential sell-off ahead.
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