XRP Price Risks Shocking 22% Crash, Analysis Shows

Is the recent rebound in XRP price just a temporary blip before another significant downturn? Many in the crypto community are asking this question as technical indicators and on-chain data signal potential headwinds for the digital asset.

Understanding the Current XRP Price Situation

After climbing over 40% from its early April lows, XRP reached around $2.50 by June 4. However, this level remains well below its January peak of $3.40, leaving investors cautious about the sustainability of the rally. The key question now is whether XRP price will continue its upward trajectory or face a sharp correction.

What On-Chain Data Says About XRP Outlook

One significant on-chain metric raising concerns is XRP’s Net Unrealized Profit/Loss (NUPL). This indicator has entered the “Belief – Denial” phase. Historically, this phase has coincided with moments where most holders are profitable but may lack the conviction to hold through volatility, potentially leading to selling pressure. In 2021, XRP reached this same zone before a notable reversal. If XRP fails to gain significant momentum from current levels, history suggests a potential pullback is likely based on this metric.

Institutional Sentiment and XRP Analysis

Adding to the cautious outlook is the apparent decline in institutional interest in XRP investment products. Recent data shows significant outflows from XRP exchange-traded products (ETPs), totaling $56.60 million in May alone. This contrasts with inflows seen in ETPs for other altcoins like Ether, Solana, and Sui. Decreased institutional appetite can negatively impact the XRP price.

Technical Pattern Points to Potential XRP Crash

From a technical perspective, XRP price is currently fluctuating within a falling wedge pattern on the weekly chart. While a falling wedge is typically considered a bullish reversal pattern, price action within the wedge often involves significant pullbacks from the upper trendline. XRP recently tested this resistance and is undergoing a pullback. Previous pullbacks from this line have led to sharp corrections, including a 45% drop in March.

This pattern suggests a potential decline towards $1.78, which is approximately a 22% drop from current levels and aligns with the wedge’s lower trendline and the 50-week exponential moving average (EMA). In a more bearish scenario, XRP could potentially fall towards the wedge’s apex point around $1.45, representing over a 38% decline from current levels. However, it’s important to remember the bullish potential: a clear breakout above the wedge’s upper trendline could target the pattern’s height, potentially sending XRP towards $3.66, a new record high.

Is an XRP Price Prediction of a Drop Likely?

Considering the signals from the NUPL metric, institutional outflows, and the current position within the falling wedge pattern, the technical and on-chain evidence points towards a significant risk of a price decline for XRP in the near term. While a bullish breakout remains possible, the immediate signals suggest caution is warranted. Investors should monitor key support and resistance levels within the falling wedge pattern.

Summary: Multiple factors, including on-chain data signaling a potential local top, waning institutional interest reflected in ETP outflows, and a bearish retest within a falling wedge pattern, indicate that XRP price faces a significant risk of a downturn. While a long-term bullish reversal is possible if the wedge breaks upwards, the immediate outlook suggests a potential crash of 22% to 38% is a distinct possibility based on current analysis.