XRP has suffered a sharp reversal, erasing a significant portion of its gains from the fourth quarter of 2024. The cryptocurrency has entered a strong bear market, dropping by over 30% from its highest level this year despite multiple bullish catalysts within the Ripple ecosystem.
XRP Faces Bearish Pressure Despite Positive Developments
The Ripple USD (RLUSD) stablecoin has continued to gain market share, with daily trading volume surpassing $100 million. Additionally, projects like Coreum and Sologenic, built on the XRP Ledger, have seen increased traction.
There is also optimism that the Securities and Exchange Commission (SEC) could drop its appeal against Ripple Labs. The agency has already backed away from lawsuits against Uniswap, Coinbase, and Gemini, fueling speculation that XRP may see regulatory relief.
Furthermore, XRP transactions continue to rise. Data from XRPScan reveals that transactions approached 1 million on March 1, signaling ongoing network activity. Analysts also predict that the SEC could approve a spot XRP ETF later this year, with JPMorgan estimating $8 billion in inflows within the first year.
Wyckoff Theory Explains XRP’s Decline
Despite these bullish fundamentals, XRP has entered a bearish phase due to market sentiment and broader crypto trends. The Crypto Fear and Greed Index has plunged to an extreme fear level of 18, causing many investors to remain cautious.
One of the best explanations for XRP’s price movement is the Wyckoff Theory, a 90-year-old market analysis model developed by Richard Wyckoff. This theory describes four key price phases:
- Accumulation – The price moves within a narrow range as investors accumulate assets.
- Markup – Demand outweighs supply, leading to an upward breakout.
- Distribution – The price stabilizes as market participants become indecisive.
- Markdown – A significant downturn occurs when supply overtakes demand.
XRP’s Market Phases
- Accumulation Phase: XRP remained in this phase for over three years, trading in a narrow range with limited price movement.
- Markup Phase: XRP’s breakout was triggered in November 2024, following Donald Trump’s U.S. presidential election victory, which fueled optimism about crypto-friendly regulations.
- Distribution Phase: After reaching its yearly peak, XRP faced selling pressure and market indecision, forming a head and shoulders pattern, with a neckline at $2.
- Markdown Phase: If XRP falls below the $2 neckline, it risks entering a markdown phase, potentially declining to the 78.6% Fibonacci retracement level of $1.1395.
What’s Next for XRP?
The next critical support level is at $2, and a break below this threshold could accelerate selling pressure, pushing XRP lower. However, if market sentiment improves, the coin could stabilize and resume an upward trajectory. For now, traders should watch for price movement near the $2 neckline, which will determine whether XRP continues its decline or finds support for a rebound.
