Can XRP lose value again?

XRP is one of the most popular cryptocurrencies, attracting attention from both investors and traders. After reaching a multi-year high of $2.90 in November 2024, the price of XRP dropped sharply by more than 25%. In light of this decline, the question arises: will the price continue to fall in the coming weeks? In this article, we will explore the main reasons for this drop and what to expect for the cryptocurrency at the end of December.

Reasons for the decline

The price of XRP fell by 25% after reaching a high of $2.90, the highest since January 2018, and was $2.13 on December 23. The main reason for the decline was the mass liquidation of positions by large investors at overbought levels, as well as the hawkish policy of the Federal Reserve, which creates uncertainty and may lead to further losses in the short term.

Bearish trend and technical indicators

Since the beginning of December, XRP's price has started to consolidate within a Fibonacci correction range. The $3.00 level became a significant resistance, while support is at $1.98, which represents a 15% drop from the current price. As of December 23, the cryptocurrency failed to break through resistance, and now there is a possibility of falling to support at $1.98 by the end of the month.

Furthermore, the Relative Strength Index (RSI) on the weekly chart for XRP remains above 70, indicating that the asset is overbought and there is a potential trend reversal.

Distribution by large investors

Large holders of XRP ("whales") started reducing their holdings in December, indicating profit-taking. This increases the supply on the market and puts downward pressure on the cryptocurrency's price.

What does this mean for XRP's price?

XRP is forming a descending triangle on the daily chart, signaling a bearish trend. A breakdown of the $2.19 support level could lead to a drop to $1.69. However, if the cryptocurrency bounces from the lower trendline, it may test resistance at $2.50. A breakout above this level would open the way for a recovery in price and a return to $2.90.

Future of XRP: optimism and bullish flag

Despite short-term corrections, many analysts are predicting long-term growth for XRP. The current consolidation within a bullish flag pattern could lead to a price increase of 60%, targeting $3.50 by January 2025.

The positive outlook is supported by both technical indicators and fundamental factors. The resolution of the SEC lawsuit and the potential launch of spot ETFs for XRP could significantly improve market sentiment. There are also rumors that Bitstamp is developing derivatives based on the XRP Ledger, which could further boost interest in the cryptocurrency.