The XRP price fell 15.4% on Monday, along with the rest of the crypto market. The leading digital assets, Bitcoin and Ethereum, are down 14-16% to currently trade at $51000 and $2243, respectively. This sell-off could be attributed to a broader market correction, as Japan’s index plunged 12% amid the Bank of Japan (BOJ) raising interest rates to contain inflation. As fear of recession escalates, here are key reasons why the XRP coin may plunge to $0.4.

Also Read: Bitcoin ETFs To See 30% Gap Down From Jan Levels On Monday, Says Peter Schiff

Forced Liquidations and Bearish Funding Rate Exacerbate Sell-Off

XRP price has been on a six-day downward spiral, plummeting from $0.627 to $0.448—a 28.8% decrease. During this period, long position holders faced nearly $30 million in forced liquidations, according to Coinglass data. These liquidations have increased sell orders in the market, intensifying the supply pressure.

XRP Total Liquidations Chart | Coinglass

Moreover, derivative market data for XRP shows an Open Interest (OI)-Weighted Funding Rate of -0.0064. This negative rate suggests that short sellers incur costs to hold their positions, reinforcing a solid bearish outlook and the anticipation of further price drops.

XRP OI-Weighted Funding Rate

Also Read: Bitcoin Leads Crypto Outflow With $400M Lost Amid Recession Fears

EMA Death Cross Imminent on Daily Chart

Amid the ongoing correction, the XRP daily chart shows the 50-day Exponential Moving Average is poised to break below the 200-day EMA. This death crossover signals a major signal that could accelerate the current bearish momentum.

XRP/USDT 1d Chart

Though the flattish 100-and-200-day EMAs signal a sideways trend, the coin price trading below them projects the sellers to have the upper hand.

Triangle Pattern Brings Major Support For XRP Price

The weekly chart reveals that XRP has undergone another bearish reversal within the symmetrical triangle pattern. This chart setup consists of two converging trendlines leading a sideways trend since September 2021. In theory, the ongoing consolidation should serve as a foundation for the prevailing market trend to gather momentum for a significant move.

If history repeats, the coin price is poised for another 12.5% drop to retest the triangle support at $0.4. A fall below this support may lead to a major downfall for this asset.

On the contrary, the lower trendline has remained a strong accumulation zone for crypto buyers since December 2020. If the support holds, the altcoin could rise over 50% to a challenged overhead trendline around $0.61.

The post 3 Reasons Why XRP Price Correction Heading to $0.4 appeared first on CoinGape.

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Filed under: News - @ August 5, 2024 1:19 pm