XRP recently witnessed its biggest price drop in five months, but the token’s technicals currently point to a potential price reversal and an imminent rise.
The crypto market recorded one of its most substantial crashes in a long while on Jan. 3. Several assets, including Bitcoin (BTC) and Ethereum (ETH) witnessed massive losses. XRP did not escape the onslaught, dropping 20% from $0.6354 to $0.5040 in less than four hours.
This slump marked XRP’s largest price decrease since Aug. 17, 2023 when it collapsed to a low of $0.4309. Despite staging a recovery from the latest drop, XRP ended Jan. 3 with a 6.69% loss amid sustained bearish pressure in the broader market.
XRP Faces Bearish Pressure
The recent price collapse resulted in XRP dropping below the 50-day exponential moving average (EMA) currently at $0.6139.
This development signals bearish momentum for the crypto token in the short term. Jan. 3 saw massive selloffs, marked by liquidation of shorts and a surge in 24-hour trade volume to $3.4 billion.
While short-term momentum remained largely bearish, XRP’s long-term outlook is currently indecisive, as the crypto asset now trades around the 200-day EMA at $0.571. The bulls would need to push the token well above this level to retain the long-term bullishness.
Amid the downward spiral, XRP has defended the $0.569 support threshold, attempting to seal its position above the $0.57 territory. Market participants have begun re-entering the scene, with growing demand, as investors look out for a potential recovery.
Trade volume, which collapsed 57% yesterday amid a lack of investor interest, has now witnessed an uptick, rising to $1,507,502,496 as of press time. Nonetheless, open interest (OI) remains 5% down within the derivatives market, as traders continue to lick the wounds of the recent mass liquidation.
XRP Open Interest | Coinglass
Technicals Suggest a Reversal
Despite this, optimism is slowly returning to the market, as technicals indicate a potential price rise. Notably, the Commodity Channel Index (CCI), a momentum oscillator for identifying overbought and oversold conditions, recently dropped to -218.
XRP 1D CCI
A CCI value of -218 indicates a significant oversold condition for XRP, possibly suggesting that the recent decline might have been too rapid and the asset could be due for a rebound.
Interestingly, XRP’s Relative Strength Index (RSI) has also slumped to 34.71 as of press time. This metric, combined with the CCI of -218, strengthens the indication that the asset has slipped into oversold territories and might be due for a potential reversal or a bounce-back.
XRP 1D RSI
XRP is down 3.86% today, having relinquished the gains of yesterday. The crypto asset’s first resistance level at this stage currently sits at $0.5786, at the Fib. 0.382 point.
XRP Fibonacci Retracement
This marks the last resistance point below $0.60, as the next roadblock currently resides at the pivotal Fib. 0.5 level ($0.6013).
