Ripple’s XRP token has now dropped to its lowest price point since October 17. It lost a total of 16 percent in a span of 48 hours. This is bad news, to say the least, for Ripple and the whole XRP community. It is by no means permanent and can undoubtedly have a turnaround.
What makes the drop alarming is that even though the sell-off is reflected in other major cryptocurrencies as well, others have shown immediate signs of recovery. While the decline is not unique to Ripple and its XRP, not being to recover somehow is.
Bitcoin, at one point, fell to $6,500 but achieved a reversal. On the other hand, Ethereum, at one point, refused to budge at $122 but then moved suddenly to above $125. Still, these are hardly high prices. Ripple, in particular, however, remained struggling to gain strength against the US dollar.
At present, the XRP price is trading to a new 2-year low of $0.1741. This indicated that it has already settled well below the 100-hourly simple moving average. It is presently trying to correct higher, but it is apparently struggling to gain strength above $0.2000.
Bitcoin and Ethereum’s sudden reversal, however, are optimistic signs that Ripple can eventually move up too and reach above $0.2000.
XRP’s performance is seriously worrying when one compares its market cap at present to the cap it reached in January 2018. XRP’s market cap is now down to $8 billion, but the figure was an estimated 17 times that number, at $142 billion.
Pessimistic Technical Indicators
From a technical vantage point, XRP’s current price chart already looks quite fragile. Several key support levels have been taken out to the downside, which means that the chart looks extremely alarming and worrying. At the very least, XRP now has to rally back and reach the $0.21 level. This level has become a stern point of resistance.
If a break above the 22 EMA on the daily chart could be achieved, this would be a great relief. It can help rally XRP to the upside.
Worse, the next level of support to the downside for XRP is now at $0.16 and $0.14, respectively. A break-even below those levels could push price levels to those posted in early 2017. The levels could fall down to $0.08, $0.06, and even down to $0.02.
The movement of XRP in a span of five months, which is shown on Coinbase, exhibited a moderate level of volatility. The most recent fall triggered the coin to lose critical supports. However, the 200-day MA has not changed all that time, while the XRP price has been falling.
Previously, there was a sense of optimism that an upward trend would finally take place in mid of October. This did not happen as the bears hit the price of XRP.
As XRP’s price continues to fall, while Tether’s market cap continues to go up, Ripple’s token could soon lose its third place among all the cryptocurrencies. It’s a position it has been enjoying for a while now, a sign of how well it has been performing until this year.
Over the year, apart from the continuous price decline, many criticisms have been made against its perceived status as a potential security. Several criticisms have also been made over the ongoing OTC token sales taking place every month.
What makes all these declines worse is the inability of the coin to gain support from the short-term as well as long-term MAs.
XRP to Face Three Issues in 2020
Because of all these price drops, the prospects for XRP prices in 2020 are quite dim. Analysts and traders have highlighted three specific problems. The greatest one is the continued dumping of the token.
Whenever those events take place, media attention is always in a flurry, which can further trigger more dumping. According to analysts, with the co-founder Jed McCaleb constantly offloading onto the market, XRP holders are always vulnerable to the activities of the large bag holders. This is even more apparent for those in the XRP community compared to other cryptocurrency holders.
What makes continuous dumping such an issue is because there are too many XRP tokens in circulation. This can lead it to hemorrhage value with constant giveaways and oversupply.
Ripple is also set to release over 200 more monthly tranches of over 220 million XRP tokens. Given how these coins are now being perceived, until a sudden recovery takes place, these millions of tokens are waiting to be dumped as well.
The second issue is the continuous price depression of XRP. The confidence of the investors is waning, and this can further push the price down. For signs of bullish support to materialize right now will take a miracle, according to some analysts. Other analysts who are more optimistic about Ripple despite the present environment said that the company has to move fast and corner the market over the next 12 months, or all is lost.
The third most significant issue for XRP in 2020 is the increased and intensifying competition from CBDCS. Despite the downward trend of late in the cryptocurrencies market, 2020 is already lining up to be the year where different sovereign digital currencies and bank-issued stablecoins will clash for supremacy. Competition is especially hitting up from China. Other countries are also looking to have their digital currencies soon.
With corporations such as Facebook and big banks such as JPMorgan all trying to join the fray well with their digital currencies, Ripple had to fight hard to stay relevant among the cross-border payment solutions in 2020.
Given all these increased competitors, Ripple might find itself displaced from the third position quickly enough, even if it recovers its prices.