XRP ($2.36) is back under the microscope as bullish momentum has yet to return with full force. Another weekend has arrived and XRP’s price action is still wrapping up around last weekend’s flash crash, which saw the cryptocurrency register its largest liquidation candlestick in history.
Now, XRP is trying to recover to higher price levels above $2. Interestingly, a technical analysis warns that before a major recovery, the price of XRP could suffer a severe decline, possibly by as much as 40%. While such a decline would be painful for bondholders, the scenario is not presented as a permanent collapse, but as a capitulation move that could precede a stronger rally.
Worst case scenario
What happened in the crypto markets last weekend ranks as the largest deleveraging event in recent history. Leveraged positions were forcibly closed on many exchanges, leading to successive liquidations that sent price action into freefall. As such, approximately $19 billion worth of positions were wiped out within hours.
In the case of XRP, that intense pressure led to a violent plunge that created a deep low fuse that broke below $1.6 on the price chart before a quick rebound above $2.2. This fuse is central to the argument that the forced selling put pressure on both long and short positions, clearing excess debt and paving the way for price trends to reset. However, it is suggested that the worst may not yet be fully priced in, and this purge could continue deeper before sentiment becomes truly bullish.
This worst-case scenario outlook is based on an analysis from Steph Is Crypto that envisions another possible 40% crash in the XRP price. As shown in the price chart below, XRP’s price action could decline and re-establish last weekend’s flash crash bottom just above $1.55.
This price level could represent the deepest downside target before the market regains its footing. If current levels give way, for example if
XRP Price Chart Analysis. Source: Steph is Crypto on X
What’s next after the crash?
The fuse already formed by the sudden flash crash is interpreted as a first series of stops, but the complete erosion of weak hands can still have room to run. Only after this purification can a more sustainable recovery be credible.
If the worst-case scenario materializes, the path forward would require XRP to first establish strong support near or around $1.55, shake off any remaining volatility, and then gather volume and momentum for the next move higher. From here, the analyst predicted an extended rally that would see the XRP price soar to new all-time highs above $3.8.
At the time of writing, XRP is trading at $2.35, up 4% in the last 24 hours.
Featured image from Getty Images, chart from TradingView
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