• XRP price has been on a steady downswing since September 7 and shows no signs of recovery.
  • The massive RSI divergence and 365-day MVRV seems to have played a pivotal role in this crash.
  • A retest of the parallel channel’s lower trend line at $0.84 or $0.77 seems plausible if the downswing continues.

XRP price set up a swing high on August 15 and breached this local top to create a new one on September 6. However, the second attempt failed as the market experienced massive selling pressure the next day. Now, Ripple is continuing to head lower with no signs of recovery. 

Technicals hinted at the crash two weeks ago

XRP price was on a roll as it rallied from $0.95 to $1.35 between August 13 and August 15. This run-up brought the uncertain and hesitant investors out of the woodwork as Ripple crashed 18% to $1 over the following weeks.

The greedy buyers pushed XRP price to set up a swing high at $1.41, well above the August 15 swing high at $1.35. While traders continued to leverage long XRP, the relative strength index (RSI) was forming a lower low during the August 15 and September 6 peaks, resulting in a bearish divergence.

This is perhaps one of the most important reasons why the XRP price collapsed massively on September 7. While this event coincided with El Salvador airdropping $30 worth of BTC to each of its citizens who downloaded a state-sanctioned wallet, the technical aspects were hinting at the overextended nature of the uptrend and suggested a crash was on its way.

As a result, the XRP price crashed 33% on September 7, and so did Bitcoin and most of the altcoins. Over the weekend, things seemed bullish as the market rallied higher, but this was an ephemeral event. 

XRP/USD 1-day chart

XRP/USD 1-day chart

The second and equally significant reason is the recent breakdown of a stable support floor. XRP price sliced through the demand zone ranging from $0.96 to $1.01 as markets dropped today. This stretch of barrier is crucial since it has been relevant since early April. Therefore, breaking below this will flip it into a formidable resistance level, preventing any short-term spikes in buying pressure to reclaim it.

Additionally, there is still a massive gap between the current position of RSI and the oversold zone, suggesting that the remittance token has not bottomed yet.

XRP/USDT 1-day chart

XRP/USDT 1-day chart

On-chain metrics add fuel to fire

The number of daily active addresses peaked at around 31,316 by the end of the first week of September. As XRP continues to decline, so does the number of investors interacting with the Ripple blockchain. 

On September 17, this metric created a lower high at 28,761, representing an 8.15% decline over the course of 11 days.

This decrease indicates that the market participants are uninterested in the prospects of XRP price right now and are likely converting/selling their holdings, leading to a downtrend.

XRP daily active addresses chart

In addition to technicals, the 365-day Market Value to Realized Value (MVRV) model also indicated that a sell-off was nigh. This fundamental index is used to identify the average profit/loss of holders who purchased XRP over the past year.

Before September 6, this number was extremely high at 86%, indicating that investors might book profit and hence cause a downswing.

Therefore, a decisive daily candlestick close below $0.96 will indicate a flip of this level into a resistance barrier. In such a case, market participants can expect the XRP price to sell off 12% to retest the $0.84 support floor. Here, the XRP price might retest the lower trend line of the parallel channel.

In some cases, exacerbation of the downswing might lead to a breakdown of this level and a retest of the next platform at $0.77, coinciding with the lower trend line of the parallel channel.

An increased selling pressure here might result in a crash similar to the one witnessed on September 7, knocking XRP price down to $0.65. 

This descent from the current position to $0.65 would constitute a 30% downswing.

XRP 365-day MVRV chart

XRP 365-day MVRV chart

On the other hand, if the remittance token manages to reclaim the demand zone ranging from $0.96 to $1.01, it will indicate the resurgence of buyers. A decisive close above $1.09 will serve as initial confirmation of the start of a new uptrend.

However, only a higher high above the September 6 swing high at $1.42 will invalidate the bullish thesis and kick-start a new rally. In this case, Ripple could continue to climb and tag the Fair Value Gap’s (FVG) upper limit at $1.60.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

We found missing market data for the Compound price; you won't believe how high COMP can rally

We found missing market data for the Compound price; you won't believe how high COMP can rally

Compound's COMP price could be a very favorable digital asset in the coming weeks. This article is meant to inform investors of data excluded on Tradingview's Binance, Coinbase and Kucoin exchanges for reasons that have yet to be explained. 

More Compound Finance news

Solana price shows early signs of weakness, here’s the scenario investors should be aware of

Solana price shows early signs of weakness, here’s the scenario investors should be aware of

Solana price shows early signs of a bearish downtrend underway. The invalidation level is a vital determinant of future price action. Solana price shows exhaustion as the bulls have lost the battle for the $40 barrier.

More Solana news

Dogecoin price will be $0.01 or $1.00 by the end 2022, here’s why

Dogecoin price will be $0.01 or $1.00 by the end 2022, here’s why

Dogecoin price pulls back to $0.06 after seeing rejection just below the $0.08 barrier on Monday. DOGE price points to $0.055 as a bearish confluence zone on the Fibonacci Projection Indicator. Invalidation of the bullish uptrend remains $0.048 with one caveat.

More Dogecoin news

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Summertime bull-run a multi-year bear market?

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Summertime bull-run a multi-year bear market?

Bitcoin price is currently trading at $20,727. Investors will likely stay on the sidelines until the peer-to-peer digital currency can hurdle above the 200-week simple moving average (SMA), currently priced at $22,540. 

More Bitcoin news

Bitcoin: Everything you need to know about BTC 200-week MA

Bitcoin: Everything you need to know about BTC 200-week MA

Bitcoin price has gone through turbulent times over the last few months. From reaching a new all-time high to hitting yearly lows and revisiting levels since 2020, the crypto markets have been extremely volatile.

Read full analysis

BTC

ETH

XRP