XRP (XRP) has been quite battered in the past week, as a negative shift in the macroeconomic and political backdrop in the United States has plunged cryptocurrencies as a whole.
With a 17% loss in the past 7 days, this altcoin’s negative performance has only been surpassed by Zcash (ZEC) among the top 10 most valuable cryptos.
The Democrats’ victory in the U.S. mid-term elections catalyzed a strong decline in crypto valuations as analysts see this political shift as unfavorable for the sector.
This party has opposed the adoption of crypto assets in the country for years, and confirmed that this continues to be their position as they voted against the Clarity Act just a few months ago.
Shooting down the most robust legislation that has climbed Congress’s complex ladder is a clear sign that they are not willing to let the sector move forward until their demands are satisfied.
Analysts Expect an Increasingly Hawkish Fed After a Hotter-Than-Expected Inflation Print
Moreover, this week’s hotter-than-expected inflation print deteriorated the macroeconomic backdrop as well, as analysts now see a slight possibility that the U.S. Federal Reserve will raise rates by as much as 50 basis points.
Although the chances of that happening are still low, with odds sitting at 15% as per data from FedWatch, this indicates that the central bank’s stance is getting increasingly hawkish.
These two negative catalysts are sufficiently strong to pull the plug on what could have been the beginning of a promising bull market.
Meanwhile, sentiment readings have turned bearish as well, as the Crypto Fear and Greed Index dropped to 26, indicating that investors are in full-on “Fear” mode.
This is also evidenced by the market’s decision to completely ignore positive project-specific catalysts, such as the approval of Ripple’s national bank charter in the United States, and the success story that Ripple USD (RLUSD) has become.
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See all Ripple forecastsXRP Could Bounce Back to $1.20, But XRP is Already In Bear Market Territory
Turning to the daily chart, we can see that XRP’s selling spree has temporarily stopped at the mid-point of the token’s second bullish fair value gap (FVG).
We identified this area as the last key support to watch for the token to prevent a drop below $1 in the near term. In a previous XRP price prediction, we commented that a strong bounce off this level could result in a retest of the $1.20 area from below.
However, this may not put an end to the downtrend. It is just a necessary breather following a strong selling spree that has endured six days.
The Relative Strength Index (RSI) has hit extreme oversold levels already, and even though that has previously resulted in the continuation of the downtrend, it has also signaled that a technical bounce is nearby.
The only way that XRP can re-enter bull market territory would be to break past $1.35 in the next few weeks, which seems highly unlikely considering the negative macro and political backdrop that the crypto market is now facing.
The path of least resistance for XRP in the next few weeks is down, potentially eyeing pre-Trump price levels below $0.90.