The XRP price has lost the bullish momentum it experienced in the fourth quarter and is now at risk of a deeper meltdown. The cryptocurrency has dropped below the $2 support level for the first time since February 2, as the broader crypto market downturn continues to weigh heavily on investors.
Macroeconomic Factors Weigh on XRP
The ongoing decline in XRP’s price is largely driven by macroeconomic concerns in the United States. Former President Donald Trump has threatened significant tariffs on Canadian, Mexican, and Chinese goods, which could lead to stagflation and force the Federal Reserve to prematurely cut interest rates. As a result, bond yields have fallen sharply, with the 10-year Treasury yield dropping to 4.26% and the 30-year yield declining to 4.53%—a notable decrease from the near 5% levels seen a few months ago when the Fed signaled its intent to keep rates higher for longer.
Ripple’s Fundamentals Remain Strong
Despite the ongoing price slump, Ripple’s underlying fundamentals remain robust. Optimism is growing around the Securities and Exchange Commission (SEC) potentially ending its lawsuit against Ripple, especially after the agency recently dropped its cases against Coinbase and Uniswap. Additionally, the XRP Ledger ecosystem continues to expand, attracting more developers and projects.
Speculation is also rising around a potential XRP spot exchange-traded fund (ETF). If approved, such an ETF could drive significant institutional investment into XRP, increasing demand and potentially stabilizing its price.
Technical Indicators Signal Further Decline
From a technical perspective, XRP appears poised for a deeper correction. The price has now entered a critical danger zone, dropping to a low of $1.9615, which serves as the neckline of a head-and-shoulders pattern—a strong bearish formation.
A head-and-shoulders pattern consists of a peak (head) flanked by two lower peaks (shoulders) and a neckline. A confirmed bearish breakout occurs when the price falls below the neckline, signaling further downside momentum.
Moreover, XRP has now reached the 50% Fibonacci retracement level and is trading below its 50-day moving average. The Average Directional Index (ADX) has surged to 36, further confirming the strength of the bearish trend, as ADX readings above 20 indicate strong directional movement.
How Low Could XRP Go?
Given these technical factors, XRP’s price could continue its descent toward the 61.8% Fibonacci retracement level at $1.6230, where it may find temporary support. This level, often referred to as the “golden ratio,” is where many pullbacks tend to stabilize.
However, failure to hold this support could result in further losses, pushing XRP toward the 78.6% retracement level at $1.13. This represents a potential 45% decline from the current price, marking a significant risk for investors.
Conclusion
While XRP’s fundamentals remain promising, its short-term outlook appears bearish due to macroeconomic uncertainties and technical indicators signaling further downside. Investors should closely monitor key support levels and broader market trends before making any trading decisions. If the anticipated ETF approval materializes or the SEC officially concludes its case against Ripple, XRP could see a strong rebound. Until then, caution remains warranted as the cryptocurrency navigates this danger zone.
