XRP Bearish Pattern Signals Possible Pullback to $2

XRP is currently exhibiting a classic bearish chart pattern, raising concerns of a potential downturn to $2. As the cryptocurrency struggles to hold key support levels, technical indicators and trading behavior suggest a weakening momentum in the market.

Bearish Head-and-Shoulders Highlights Risk of Further Losses

Since May 9, XRP has been forming a head-and-shoulders pattern on the four-hour chart, a well-known bearish reversal indicator. This formation typically signals a shift from an upward trend to a downward trajectory. The pattern consists of three peaks: a centrally higher top flanked by two lower highs. The trend is considered confirmed when the asset’s value dips below the connecting support, known as the neckline.

For XRP, confirmation came when it closed beneath the neckline at $2.33 during the early hours of May 19 in Asian markets. This development suggests that bears may now have the upper hand in the short term. If XRP remains under this neckline, the token could slide further towards $2.25, where the 200-day simple moving average stands. A continued decline could ultimately push it to $2.00, representing an overall drop of approximately 14% from its prior position.

Market sentiment has shifted as bearish momentum overtakes optimistic expectations. This aligns with a previously noted lack of bullish strength that had already indicated a potential dip to the $2.00 level.

Analysts are emphasizing the importance of defending the $2.30 mark, which serves as a critical support aligned with the neckline. Failure to maintain this level could prompt broader losses, with possible declines to $2.15 and even $1.60 in an extended selloff scenario. According to a trading analysis shared by one expert, breaking this threshold may accelerate selling pressure as investors seek to limit their exposure.

Falling Open Interest Reveals Trader Concern

The bearish sentiment is reinforced by recent data showing that open interest in XRP futures has shrunk substantially. Over just five days, open interest dropped 18%, falling to roughly $4.49 billion. This decline indicates that market participants are pulling back, reducing exposure as uncertainty grows.

The downturn also triggered a wave of liquidations in long positions. In the last 24 hours alone, over $12 million worth of long contracts were forcibly closed due to declining prices. In comparison, only $1.4 million in short positions were liquidated. This divergence suggests a lack of upward strength and further validates the current bearish tilt in the market.

Amid the ongoing selloff, XRP experienced a 3% drop in value while trading volume surged by 70%, reaching $4.1 billion. The increase in trading activity, particularly during a downturn, often signals intensified selling or structural repositioning as market players adjust their strategies in light of shifting technical patterns.

Related: Expert Advice: Sell XRP If You’re Confused

The confluence of technical breakdowns, liquidations, reduced futures interest, and dramatic volume shifts paints a cautionary picture for XRP. The path to recovery will largely depend on whether bulls can re-establish support above key trendlines or if further weakness drives the asset closer to historic support levels near $2.00.