Market emotions turned tense after a tweet from Crypto Patel claimed that XRP crashed about 69% from its recent peak. The digital asset slipped after breaking below the $2 zone and is now moving near $1.39, triggering fear among short-term holders.
Even with the large drop, some traders believe that this is only a normal shakeout in the cycle. The price had already gone up by around 835% from its long accumulation base before reaching resistance near the all-time high price of $3.66. Such large price movements are normally followed by a long cooling-off period.
On-chain data indicated a heavy loss realization. Santiment indicated that there were weekly realized losses of approximately $1.93 billion. In the past, such selling has sometimes occurred near market bottoms, where weak holders have sold out, and stronger holders have started accumulating quietly.
Read More: XRP Extends 17.5% Slide: Can the $1.50 Support Hold Firm?
Traders are also focusing on the large demand zone from $0.86 to $0.66. They believe that this zone is a multi-year demand zone where buyers used to come in.
Ripple’s network chatter also reveals that the asset is now testing the higher-timeframe levels of demand that fueled the consolidation periods. A bullish trend may still be possible if the price remains above $0.66.
Market analysts believe that large rallies in selling can occur before prices begin to move upwards. When people sell due to fear, professional long-term investors begin to buy. Some market analysts in the region believe that accumulation is taking place quietly as panic grips retail investors.
A trader named JD posted about a symmetrical triangle being formed on the monthly charts. The price has been compressed between a declining resistance line and a rising support line since the peak in 2018. There is also a possible hidden bullish divergence.
This occurs when price forms higher lows, but momentum charts form lower lows. This is an indication of strong price action despite corrections. If XRP is able to close above the declining resistance line, a massive breakout may start.
It is expected that the price will test the broken resistance level before proceeding to higher levels. Based on past experiences, years of tight price action are usually followed by a strong breakout.
Read More: XRP Approaches Strategic Accumulation Zone With $10 Price Target in Sight
