The XRP price has lost the bullish momentum it experienced in the fourth quarter and is now at risk of a deeper meltdown.
Ripple (XRP) dropped below the $2 support level for the first time since Feb. 2 as the crypto market downturn continued.
The ongoing decline is largely driven by macroeconomic factors in the United States, where Donald Trump has threatened hefty tariffs on Canadian, Mexican, and Chinese goods.
These tariffs could lead to stagflation and force the Federal Reserve to cut interest rates prematurely. Indeed, the 10-year Treasury yield has fallen to 4.26%, while the 30-year yield has dropped to 4.53%. A few months ago, both hovered near 5%, as the Federal Reserve signaled its intention to keep rates higher for longer.
Despite the price decline, Ripple’s fundamentals remain solid. The odds of the Securities and Exchange Commission ending its lawsuit against Ripple have improved, especially now that the agency has dropped its cases against Coinbase and Uniswap.
Meanwhile, the XRP Ledger ecosystem continues to attract more developers, and speculation over a potential spot XRP exchange-traded fund has increased. If approved, an XRP ETF could attract billions in inflows, driving higher demand for the token.
XRP price crashes to the danger zone
Technical indicators suggest that Ripple may be headed for a strong bearish breakout in the coming days, now that it has entered a danger zone. The price crashed to a low of $1.9615, a key level since it served as the neckline of the head-and-shoulders pattern.
The head-and-shoulders pattern consists of a head, two shoulders, and a neckline. A bearish breakout is confirmed when the price drops below the neckline.
Additionally, XRP’s price has reached the 50% Fibonacci retracement level and has fallen below the 50-day moving average. The Average Directional Index has also surged to 36, indicating a strong trend, as ADX readings above 20 typically confirm momentum strength.
Given these factors, Ripple’s price could decline further to the 61.8% retracement level at $1.6230, where it may experience a reversal. This retracement level, known as the golden ratio, is where most pullbacks typically occur.
Failure to hold this support could result in further downside, potentially pushing XRP to $1.13, the 78.6% retracement level, approximately 45% below the current price.
