3 reasons for the 30% drop in the price of Ripple in the next two weeks
A number of technical and fundamental indicators, as well as traders’ feelings on social media, indicate that the Ripple price may fall by as much as 30% after jumping 8% last week.
To Report Kevin Telegraph, there is a risk that the price of Ripple will fall by more than 25% in the coming weeks. The several-month downtrend and the fear of oversupply of XRP tokens in the market are among the factors that threaten this digital currency.
Descending pattern on the Ripple chart
After the price of Ripple reached its second historical peak in April 2021 ($ 98.98), the price of this digital currency has always been stabilizing in a downward triangle pattern.
As you can see in the chart below, Ripple has reached several lows since then (the downtrend line in the right triangle pattern) and at the same time has established strong support around $ 0.55 ( Is the horizontal trend line in the right triangle pattern).
In the week ending March 13, Ripple hit the roof of this descending triangle again. Now, a number of traders have warned that the digital currency may re-enter a correction and reach support for the pattern near $ 0.55. This means that the price of Ripple may continue to fall by 25 to 30%.
Other indicators and downtrends created alongside this downtrend triangle have fueled Ripple’s downtrend.
For example, we can refer to the Kendall pattern of “descending hammer” that was created on March 12 (March 21) in the Ripple chart. The pattern of the descending hammer consists of a candlestick that has a small body and a long, high shadow. The hammer indicates that the buying pressure of this digital currency is decreasing around the level of $ 0.85.
In addition, the Ripple price hit the resistance of moving averages on the chart on this day. This resistance was the intersection of the 20-week moving average (EMA) (green wave on the chart) and the 50-week moving average (red wave on the chart). As you can see, Ripple could not overcome the resistance.
Fear of oversupply of Ripple tokens in the market
The possibility of a Ripple price drop was raised when Ripple Labs announced that it would safely lock 800 million Ripple tokens under its pre-determined schedule.
On March 3, the company transferred 100 million ripple tokens (worth $ 40 million) to wallets in digital currency exchanges. Meanwhile, it kept 700 million Ripple tokens (worth $ 550 million) in a safe deposit box. The incident sparked rumors that the company would supply at least 200 million Ripple units. According to the rumors, Ripple Labs will offer this amount to finance Ripple’s operating expenses and also to distribute Ripple among the company’s customers around the world.
The fear of traders and the increase in sales pressure due to the unexpected increase in the supply of Ripple tokens is not unprecedented. For example, after Ripple’s net supply rose from $ 40.46 billion to more than $ 47 billion in just two days, the price of the digital currency fell 50 percent in four months to close at $ 0.60.
However, the 800 million units that Ripple Labs picked up and locked have not yet been reflected in its net supply.
Increase the risk of people making a profit
Another factor that indicates that the price of Ripple may fall by 25 to 30 percent is the data of the Santiment platform. This platform examines the trend of traders’ feelings on social networks and its impact on market trends.
Centim said that the price of Ripple has increased by more than 15% by the week ending March 12 (March 21) and during this period, the amount of search on social networks for the hashtag “XRPNetwork” has also increased. This indicates that in the future, the selling pressure of traders of this digital currency may increase.
Sentiment has said about this:
History has shown that when XRPNetwork hashtag searches increase, more traders are thinking of exiting the market (selling).