Last week, an XRP enthusiast emphatically declared, “You’re not bullish enough!” on X, following the announcement that the U.S. Securities and Exchange Commission (SEC) has dropped its long-standing case against Ripple, the company behind the token. This news has generated palpable excitement among investors who see it as a significant step toward XRP’s potential in the cross-border transactions market.
The conclusion of this protracted legal battle has indeed relieved a considerable burden on XRP’s performance, particularly when juxtaposed with the broader market trends during the 2021 bull run. Additionally, various factors, including the ever-growing XRP ETF speculation and the possibility of the token being included in the U.S. strategic reserve, further amplify optimism among supporters.
However, despite the overwhelming enthusiasm, recent price movements hardly mirror this positivity. Key momentum indicators are revealing a concerning bearish trend, indicating a potential price decline ahead.
XRP experienced a significant surge of over 11%, reaching $2.59 last Wednesday in celebration of the SEC’s announcement. Yet, since then, the price has remained stagnantly rangebound between $2.30 and $2.50, even amidst optimistic expectations regarding reciprocal trade tariffs from President Donald Trump slated for April 2.
Three-Line Break Chart Analysis
The first indication of a bearish trend reversal emerges from the three-line break chart. This analytical tool, designed to filter out short-term price fluctuations, focuses solely on price movements to identify genuine trend changes as opposed to relying on arbitrary trading rules.
A bearish shift is marked by the appearance of a new red bar that dips below the lowest point of the previous three green bars. Recently, this scenario unfolded for XRP, with a new red bar forming in the weekly timeframe following the SEC news, indicating a shift in momentum.
Such patterns have historically foreshadowed the onset of prolonged bear markets, recalling trends observed in early 2021 and 2018.
MACD Indicators
The Moving Average Convergence Divergence (MACD) histogram, a key tool for assessing trend strength and potential shifts, is currently presenting deeper bars beneath the zero line on the weekly chart. This signals that downside momentum is strengthening.
Notably, the MACD had entered positive territory back in November, which corresponded with XRP’s price surge from $1 beyond the $3 mark.
Moreover, the 5- and 10-week simple moving averages (SMAs) have also crossed into bearish territory, implying that the prevailing market trend favors downward movement.
Bollinger Bands Examination
The Bollinger Bands, which delineate price volatility by establishing bands two standard deviations above and below XRP’s 20-week SMA, have expanded significantly following recent price rallies. Historical data suggest that following such broadened bands, prices often trend lower, as witnessed after mid-2021 and early 2018.
When Will Bullish Sentiment Return?
A decisive movement past the $3 mark, which was established on March 2, could invalidate the current bearish outlook and disrupt the ongoing pattern of lower highs, thereby paving the way for a renewed bullish trend.
While some analysts are projecting that XRP might reach as high as $10 by the decade’s end, the path ahead appears fraught with volatility, necessitating close observation of emerging trends and market indicators.
