Ripple’s XRP Faces 50% Correction Risk as Bear Pattern Shocks Holders

The XRP price remains unstable as analysts point to bearish metrics against trader confidence. The asset’s woes stem from negative on-chain factors and the slow start to a projected altcoin season. However, institutional investors back a long-term bullish outlook, citing present regulatory leanings in the United States and global markets.

Will XRP Bulls Survive Bearish Pressure?

On-chain data shows XRP’s Net Unrealized Profit/Loss (NUPL) ratio pointing downwards after an extended sideways trading. Crypto traders rely on this metric to gauge the paper profit/loss of an asset over a period of time. This shows the current sentiment to determine the short-term correction.

After a strong rally at the start of the year to $3.40, the asset plunged over 35% to trade at $2.10, impacting its NUPL for new users. The charts show similar patterns when the asset plunged over 50% alongside the NUPL. In 2018, XRP traded above $3 before marking a 90% drop to $0.30 after the metric flipped bearish.

A similar situation occurred after the 2021 bull run, which saw a new all-time high for Bitcoin (BTC) and other assets. The XRP price spiked to $1.90 before a subsequent slip around the $.05 mark. This decline was also linked to ongoing regulatory hurdles following an SEC lawsuit against Ripple and two executives. At the same time, the NUPL took a tumble, suggesting heightened sell pressure. 

This month, the metric has plummeted into the “denial” zone which might trigger price drops erasing recent gains. For most traders, the assets declining below the $2 level will build a new resistance holding back the altcoin season. On the other hand, positive United States regulations and the creation of a crypto task force gave investors renewed confidence in the market.

What’s Next For the Market? 

Crypto prices are a shadow of their Q4 successes, which were characterized by institutional appetite and a wider community frenzy. The last 30 days saw the exact opposite as outflows spiked due to whale hedging losses. As a result, both BTC and altcoins saw huge institutional exits.

However, the next quarter holds promise as bulls eye several altcoins ETF approval to drive the chapter. For XRP, increased institutional volumes will lead to a reversal.

“XRP shows signs of reversal after hitting strong support near 2.1000, with buyers gradually regaining control. If momentum builds, the price is likely to retest 2.2235 and aim for a breakout toward higher resistance levels, signaling a bullish move ahead,” Crypto analyst BitGuru wrote.