XRP Price Drop: Derivatives Data Signals Next Target

What to Know:

• XRP experienced a sharp decline, despite positive ETF inflows and a major Ripple announcement.
• Broader market FUD and liquidation cascades appear to be the primary drivers of the price drop.
• XRP’s price movement highlights the token’s sensitivity to overall crypto market sentiment and liquidity dynamics.

XRP has recently experienced a significant price drop, becoming the worst-performing large-cap altcoin. This decline occurred despite positive developments such as inflows into XRP ETFs and Ripple announcing institutional support for Hyperliquid. The price movement underscores the complex interplay of market sentiment, liquidity, and external factors in the crypto space.

Price Plunge Amidst Positive News

Over the past 24 hours, XRP slumped by over 10%, reaching a low of $1.42, a level not seen since late November 2024. This sharp downturn contrasts with the asset’s surge to $2.40 just a month prior, followed by a subsequent 40% decline. The recent price action raises questions about the underlying factors influencing XRP’s market behavior.

ETF Inflows Contradict Price Action

Interestingly, the recent price drop occurred despite positive inflows into XRP ETFs. Data indicates that investors added $19.46 million on Tuesday and $4.83 million on Wednesday, suggesting institutional interest in XRP exposure through these financial vehicles. This divergence between ETF activity and price movement indicates that other forces are at play.

Ripple’s Institutional Push

Adding to the puzzle, Ripple recently announced institutional support for Hyperliquid through its prime brokerage platform. This move signifies Ripple’s continued efforts to expand its ecosystem and attract institutional clients. The positive news, however, failed to provide a buffer against the prevailing market downturn.

Market FUD and Liquidation Cascades

The most probable cause behind XRP’s recent struggles appears to be the growing fear, uncertainty, and doubt (FUD) within the broader crypto market. As investors become risk-averse, they tend to reduce their exposure to volatile assets like XRP, leading to sell-offs. Furthermore, liquidation cascades, where a series of forced liquidations trigger further price declines, may have exacerbated the situation.

Technical Outlook and Support Levels

Analysts have identified critical support levels for XRP, with $1.42 and $1.27 being the immediate targets before a potential move towards the $1.00 level. Breaking below these support levels could trigger further selling pressure and potentially lead to a more significant correction. The technical outlook suggests that XRP’s price trajectory will depend on its ability to hold these key levels amid ongoing market volatility.

In conclusion, XRP’s recent price decline highlights the complex interplay of factors influencing the crypto market. Despite positive news and ETF inflows, broader market sentiment and liquidation cascades appear to be the primary drivers of the token’s price action. As the market navigates ongoing uncertainty, XRP’s ability to weather the storm will depend on its resilience and the strength of its underlying ecosystem.

Related: XRP Price Forecasts for the Week Ahead

Source: Original article