XRP Price News: Drop to $0.80 Likely as Whales Position to Dump XRP

XRP (XRP) has bounced off a key support level after briefly breaking below, potentially setting the stage for a bear trap if the price keeps rising.

Trading volumes have declined in the past couple of days, dropping to just $1.9 billion – a figure that accounts for only 2.7% of the asset’s circulating market cap.

This reflects weaker selling pressure despite the market’s bearish tone. That said, sentiment remains heavily depressed as indicated by the Fear and Greed Index.

This sentiment gauge has dropped to 15, meaning that investors are in “Extreme Fear” mode. A change in the market’s expectations concerning the course of monetary policy in the United States is responsible for this shift.

Analysts Now Expect a Rate Increase This Year

Analysts have now assigned a 60% chance of a rate increase by the Federal Reserve in September as inflation has nearly doubled the central bank’s target.

A hawkish Fed has a negative impact on risky assets like cryptocurrencies and XRP, and altcoins are typically heavily battered in these scenarios, as it happened in 2022.

XRP’s net inflows to exchanges have increased significantly in the past few days, indicating that large addresses (commonly known as whales) are positioning for a big dump.

On-chain data from Santiment shows that net inflows have increased to their highest level since November last year, back when XRP started to drop from $2.20 to $1.90.

This sets the stage for a break below the $1.13 support, which we see as the last line of defense for the token before a dramatic decline to $0.80.

Such a drop translates into a 30% downside risk for this altcoin, and would be in line with both the market’s bearish sentiment and expectations regarding the macroeconomic landscape.

Weekly Signal Still in Play as XRP Bounced Off Its Current Cycle Low

Moving to the charts, the weekly time frame is still in focus for us as a long-dated buy signal continues to be in play despite this latest decline.

We have been tracking this historical pattern for months now, as it has yielded some attractive returns in the past.

The signal triggered once the Relative Strength Index (RSI) dropped below 32. The price started to recover after that happened, but it is now revisiting that previous cycle low.

That has happened in previous instances. Hence, we could expect a rally over the next few days if that historical pattern repeats.

Our long-term target for XRP is $5.40 based on its performance after this buy signal popped up in the past. We are once again seeing the RSI sitting near that 30 threshold. The lowest the oscillator has gone in the past 6 years is 27.

If it drops below that level, that would be a clear indication that we are in front of a strong bear market, which would confirm an upcoming drop to our mid-term target of $0.80.

XRP Hit Our Short-Term Target of $1.13 – What’s Next?

Heading to the daily chart, we nailed our previous XRP price prediction. This trade yielded a 3x return for those who were paying attention.

We expected that a drop below $1.32 would push the token to $1.13, and that’s exactly what happened.

Now, this recent bounce would likely drive XRP back to that former demand zone. If the price action fails to climb above that level, then a sharper drop will likely commence.

In that case, we may get a second chance to short this altcoin but with a much lower target in mind and a much more attractive risk-reward ratio.