XRP Faces a Potential 45% Decline Amid Market Downturn and Technical Signals

XRP has fallen below the critical $2 support level for the first time since early February, signaling a potential downturn and placing the cryptocurrency in a danger zone that could result in a steep 45% price drop.

The recent market slump, driven by macroeconomic pressures such as political instability and shifting policies in the U.S., has triggered this decline. Former U.S. President Donald Trump’s threats of imposing heavy tariffs on Canadian, Mexican, and Chinese goods are raising concerns about stagflation, which could force the Federal Reserve to cut interest rates prematurely. This uncertainty has pushed the 10-year Treasury yield down to 4.26% and the 30-year yield to 4.53%, both of which were near 5% just a few months ago when the Fed had indicated its plans to maintain high interest rates.

Despite the bearish price action, Ripple’s fundamentals remain relatively strong. The prospects of the Securities and Exchange Commission (SEC) concluding its lawsuit against Ripple have improved, especially after the agency dropped similar cases against Coinbase and Uniswap. Additionally, the XRP Ledger continues to attract developers, and there is growing speculation around the potential approval of a spot XRP exchange-traded fund (ETF), which could significantly boost demand for XRP.

Technical Breakdown of XRP’s Decline

From a technical standpoint, XRP is currently experiencing a bearish setup that could lead to further losses. The price recently dropped to $1.9615, which is a critical level as it corresponds to the neckline of a head-and-shoulders pattern. This pattern is typically a bearish reversal signal, and a breakdown below this neckline suggests a continued downtrend.

Moreover, XRP has reached the 50% Fibonacci retracement level and has fallen below its 50-day moving average, both of which are bearish indicators. The Average Directional Index (ADX) has surged to 36, signaling a strong trend, with values above 20 generally indicating significant momentum in the prevailing direction.

Given these technical factors, XRP could see a further decline to the 61.8% Fibonacci retracement level at $1.6230, a key area where the price may experience a reversal. If this level fails to hold, XRP could plunge to the 78.6% retracement level at $1.13, marking a potential 45% drop from its current price.

XRP is at a critical juncture. While the fundamentals show some positive prospects, such as the potential for a favorable resolution with the SEC and the growing interest in its ecosystem, the technical indicators suggest a significant risk of further downside. Traders and investors should remain cautious as the price enters a potentially dangerous zone with a possibility of a substantial correction in the near term.