XRP (XRP) price has dropped 10% in January as investors book profits and broader bearish sentiment takes over the cryptocurrency market.
XRP price now appears primed for further losses in the short term, primarily due to a classic bearish pattern.
XRP price trades below a bearish triangle
On Jan. 3, XRP broke below the support line of a descending triangle at $0.5934, risking a 17% correction.
Now, XRP has been trading sideways below the technical chart pattern, and this bearish pattern forms when the price consolidates inside a triangle defined by a series of lower highs and relatively equal lows.
A descending triangle is resolved after the price breaks below its support line, accompanied by a rise in trading volumes. The pattern’s breakout target is obtained by adding the height of the triangle (the thickest part of the triangle) to the breakout point on the downside.
In the case of XRP, the chart pattern was resolved on Jan. 3 as the price dropped to $0.5048, its lowest level since Oct. 19, 2023.
XRP/USD daily chart. Source: TradingView
Attempts to lift XRP were frustrated by supplier congestion from the 100-day exponential moving average (EMA), currently at $0.5934. On Jan. 17, the token lost yet another crucial support level provided by the 200-day EMA at $0.5717.
The moving average convergence divergence (MACD) indicator moved within the negative region below the neutral line. This suggested that the market conditions still favored the downside.
As such, if the sell-off continues, a bearish target of $0.4971 could be seen for XRP, down around 19% from the current levels.
XRP supply in profit at historical levels
The bearish outlook for XRP could be attributed to profit-booking by sellers. Data from market intelligence firm Santiment shows that Bitcoin (BTC), Ether (ETH) and XRP are currently exhibiting historically high-risk profit levels.
The firm posted the following chart on the X social platform, saying:
“#Bitcoin (83%), #Ethereum (84%), and #XRPLedger (81%) have their respective supplies in historically high-risk profit levels compared to their averages that hover in the 55%-75% range dating back to…..
