XRP's price has fallen sharply in recent days, causing panic selling in the market. The decline has made investors more negative as they try to limit their losses.
The rapid decline has made XRP oversold. When this happens, investors often buy to achieve a quick recovery.
XRP holders are selling to avoid losses
On-chain data for profit and loss shows losses have dominated XRP trading over the past 20 days. Many sold initially when the price rose slightly, hoping to exit the market without significant losses. But as the price continued to drop, selling increased to avoid even greater losses.
Over the past week, selling driven by losses has increased even further. A significant portion of XRP transfers occurred at investors' cost levels, indicating fear rather than strategy. Historically, such situations mean weak hands are leaving the market, and this is likely happening with XRP now.
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The Money Flow Index, which shows buying and selling pressure based on price and volume, has dropped into oversold territory over the past day. This suggests selling pressure may soon decrease.
Similar oversold values have previously provided good buying opportunities for investors. When panic selling is at its peak, those seeking value often step in. This doesn't indicate that the trend for XRP is reversing, but it can often lead to a short-term rebound when supply decreases and demand strengthens.
XRP is trading near $2.14 now and showing early signs of a minor recovery. Fibonacci analysis from the latest peak to the bottom reveals key levels. It appears buyers are attempting to regain control after the oversold signal.
The altcoin has received support above the 23.6% Fibonacci level. If the price holds here, a recovery becomes more likely. A genuine uptrend requires XRP to break above the 61.8% Fibonacci level at $2.27. If successful, XRP could continue toward $2.41, reducing losses.
Downside risks remain if support weakens. If XRP loses the 23.6% Fibonacci level, new sellers may enter. In that case, the price could drop to $2.03. If that level breaks, XRP could fall below the critical support at $2.00, potentially triggering a larger decline and breaking the positive trend.
