Ripple (XRP) Price Dips as Investors Turn to AVAX and ADA —What Next?

Insights:

• Ripple (XRP) price declined 9% this week as other mega-cap Layer-1 (L1) altcoins like Avalanche (AVAX) and Cardano (ADA) seized the spotlight
• XRP Daily Trading Volume has declined further than price this week, an indication of growing bearish momentum. 
• After a week of downward pressure, technical indicators show that XRP price has now dropped below a key reversal point signaling more downside ahead.  

Ripple (XRP) price entered a 9% correction this week, while L1 altcoins like Avalanche and Cardano hogged the spotlight. After a week-long selloff, it how now lost a key support territory. Will the bears capitalize on the weakening to force a larger downswing? 

XRP Daily Trading Volume Nosedives Amid Price Downtrend  

XRP price suffered a 9% decline this week, as investors switched focus to megacap altcoins at the forefront of the Real World Asset (RWA) and asset tokenization wave, such as Avalanche (AVAX), Cardano (ADA) and Solana (SOL). 

However, looking beyond the falling prices, on-chain data trends show that the Ripple-backed cryptocurrency has struggled to maintain steady levels of market demand. 

According to Coinglass, while XRP price only declined ~9%, from $0.67 – $0.61 between Dec 9 and Dec 16. But comparatively, the Daily Trading Volume only fell nearly twice as fast during that period, dropping 16% from  $799.9 million to $667 million. 

Trading Volume measures the dollar value of the total number of trades involving a particular cryptocurrency on a given day. Typically, it measures the degree of market demand and economic activity that the asset attracts. 

When a trading volume declines faster than the price downtrend, it signals growing bearish momentum. It suggests that as the asset is struggling to attract prospective investors, existing holders are also reducing their economic activity. 

When this alignment surfaces during a period of boom in the broader altcoin markets, it raises even more concerns. 

With the likes of Avalanche, Cardano and Solana scoring historic double digit price gains this wee, it signals that XRP may be losing traction, because investors are switching focus to rival L1 altcoins deemed to have higher profit prospects in the short-term. 

XRP Price Forecast: Possible $0.59 Retest? 

In summary, without any significant bullish news event, XRP’s price rebound prospects now rests on heavily the other altcoins retracing from their euphoric peaks, and existing investors’ holding stamina. 

In the daily timeframe, Bollinger Band technical indicators also confirms this bearish stance. XRP price is currently trading at $0.623, showing that it has now dipped below the middle-band (SMA) at $0.63. 

This alignment means that the short-term momentum has tilted in favor of the bears. However, the bulls can regroup at the lower Bollinger band around $0.59, to trigger a rebound. Failure to hold that $0.59 support level could open the door to a prolonged XRP price downswing. 

Conversely, for the momentum flips bullish, the XRP bulls will have to reclaim the $0.67 territory.