XRP (XRP) has dropped by 7% in the past 7 days, outpacing all other tokens in the top 10 except Hyperliquid (HYPE), following another rejection of a move above a pivotal level at $1.32.
Negative momentum seems to have accelerated on Thursday, as the market digested the impact of the Democrats’ big win during the U.S. mid-term elections.
This party has always been hostile to the broad adoption of cryptocurrencies in the country. Recently, they reaffirmed that stance by shooting down the Clarity Act in Congress, dealing a strong blow to the industry’s most relevant legislative push in years.
Paired with the recent $6.3 billion hack that Binance suffered, sentiment is once again at a low point.
This could put in harm’s way the continuation of the current bull market, especially as the market is completely ignoring project-specific developments like the recent approval of XRP’s national bank charter in the United States.
On top of that, adoption of Ripple USD (RLUSD) has been accelerating, while Ripple has secured key licenses to operate as a digital payments provider in top jurisdictions. All things considered, this project has made more progress than the market is currently willing to acknowledge.
Investors Have Transferred a High Volume of XRP to Exchanges Lately
We see this latest setback as short-term volatility resulting from residual bearish positions anchored to the previous cycle’s bias rather than the end of this early-stage bull market.
That said, this does not necessarily mean that we have seen the end of this short-term correction yet, as on-chain data indicates that investors are once again positioning for a big dump.
Data from Santiment shows that the 30-day moving average for exchange inflows has spiked to the highest level seen since September 26, back when this downtrend started.
Hence, we could see the selling pressure ramping up in the next few days, especially in light of these recent legislative and market-specific headwinds.
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See all Ripple forecastsXRP May Keep Dropping Based on Historical Patterns in the RSI
Turning to the 4-hour chart, we can see the strong rejection that the token experienced after hitting $1.32.
A huge bearish engulfing candle confirmed that a sell wall persisted at this level, and that quickly triggered the beginning of a strong move to $1.20 — a key support that has now been broken as well.
XRP is now on track to hit a bearish target of $1.14 that we shared in a recent price prediction article. If that level holds, we could see a technical bounce that pushes XRP back to $1.20, perhaps.
However, this move could be deceiving. Historically, when the RSI has hit levels below 30 on the 4-hour chart, that has not been the end of the bearish move.
In the past two instances, that has signaled that sellers are in control of the price action, and the token has kept dropping to lower lows for at least a week more before hitting a short-term floor.
If that’s the case, we expect that XRP could tank to $1.04 at least. At that point, the chances that a true recovery will begin will be much higher than now.