XRP Drops 10% as On-Chain Indicators Warn of Extended Downtrend

XRP is now at a critical crossroads as Alphractal, a platform that provides on-chain analytics, issued a warning on Thursday, February 5, that weakening blockchain indicators might plunge XRP into a further bearish phase if selling pressure persists. The weak market structure might affect investors in the short term.

At press time, XRP is trading at $1.42 with a 24-hour trading volume of $7.43 billion and a market capitalization of $87.08 billion. The price has declined by 10.19% over the last 24 hours and by 23.79% over the last week. This is due to the sharp correction in the overall cryptocurrency market. The price is likely to fall further.

Source: CoinMarketCap

XRP Signals Point to Deeper Bearish Phase

In a post shared on February 5, Alphractal identified three signs on the blockchain suggesting that XRP is about to enter an aggressive bear phase. Alphractal claimed that XRP was currently located at a critical zone on the blockchain, where further weakness could cause the current downtrend to continue for an extended period.

Source: X

One of the key indicators of this is the Realized Cap Impulse, which indicates capital outflows from the coin and thus a reduction in market participation. In addition, the MVRV Z-Score is near a value that has typically divided bear trends from large on-chain support areas.

The Net Unrealized Profit and Loss (NUPL) is also located on its transition line, which implies that another drop could result in unrealized losses for a large number of coin holders.

As can be observed, all of the above indicators have created a precarious situation for the coin. If the above indicators continue to weaken, then the selling pressure might rise further in the coming days. This will be due to the fact that the on-chain conditions will continue to worsen.

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XRP Technical Signals Turn Bearish

From a technical point of view, the weak trend in the XRP’s week-by-week momentum can be noted. The Relative Strength Index (RSI) is at 31.33 and is lower than its averages around 39.73.

The value at $1.42 are lower compared to the moving averages, where the 20-week simple moving averages are around $2.18, and the 50-week averages are around $2.39.

The significant distance between the moving averages and the price level, along with the fact that the price is near the 200-week moving average at $1.11 for XRP, further confirms this bearish picture. Momentum indicators also suggest caution, as the MACD is still below the signal line and the histogram is also negative.

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