XRP continued its decline after failing to convert the recent price strength into a sustainable breakout. This altcoin seemed poised for an upward movement while being pressed within a descending structure.
That setup collapsed with the return of selling pressure. Nevertheless, investor behaviors indicate that XRP may have a chance for a reversal.
New XRP holders raise concerns
XRP shows early signs of a potential trend reversal with the formation of a positive divergence on the Chaikin Money Flow indicator. Over the past ten days, the CMF has recorded a higher low while XRP price has been making lower lows. This divergence indicates that the pace of accumulation is increasing despite falling prices, reflecting growing interest from buyers.
A rising CMF typically indicates a strong capital flow even during corrective periods. In the case of XRP, this pattern suggests that sellers may have lost control while demand is quietly increasing. Although price movement remains weak, continuous accumulation often precedes reversals, paving the way for XRP's potential recovery if wider market conditions stabilize.
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Overall momentum indicators suggest that network growth is fading. Historically, the creation of new addresses has been a key driver of XRP price growth. Increased participation signifies new capital entering the system, and this influx has supported rallies during previous recovery phases.
Currently, new XRP addresses are declining to the lowest level in 13 months at 3 090. This sharp contraction indicates a state of doubt among potential investors. Weaker demand reduces liquidity support and constrains bullish catalysts. Thus, without renewed network growth, attempts at price recovery remain fragile and susceptible to renewed selling pressure.
XRP is trading near $1.95 at the time of writing after failing to break through a descending wedge pattern. This pattern suggested an expected bullish continuation. However, that hypothesis collapsed with the return of general market weakness, negating positive forecasts and reinforcing the bearish technical bias.
The recovery from the lower shadow early Monday indicated that holders absorbed the selling pressure. That optimism quickly faded as the price resumed its decline. XRP is now trading below $2.00 and barely stabilizing above $1.93. Losing this level could open the door to a drop towards $1.86.
Reversing the bearish outlook requires a critical recovery. XRP must reclaim $2.00 and close above this level to restore confidence. A confirmed breakout would support a move towards $2.25, according to wedge projections. Currently, even surpassing $2.00 would negate the current bearish outlook and reduce the risk of a pullback.
