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Ripple (XRP) Price Analysis: What Next for XRP after This $2 Billion Correction ?
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Key Points:
- XRP price retraced 6.60% on Monday Sept 16, shedding over $2 billion from its market cap as it retraced towards $0.57
- Bear traders mounted $31 million worth of SHORT positions against XRP in hopes that a disappoint Fed rate outcome could spark a massive market downturn.
- The Donchian Channel (DC) indicator sets key support at $0.55, a crucial level to maintain to avoid further downside.
Ripple (XRP) Price Analysis:
XRP price retraced 6.60% on Monday Sept 16, shedding over $2 billion from its market cap as it retraced towards $0.57, on-chain data shows that bulls traders taking on a neutral outlook as markets await the US Fed rate decision in the coming days.
XRP Price Records Sharp 6% Pullback as Bulls “Sit-and-Watch”
Ripple (XRP) emerged one of the best performing assets within the crypto markets over the past week. Buoyed by dovish macroeconomic indicators and news of Grayscale adding XRP to its list of cryptocurrency trust investment offerings, bull traders aped and drove price to 20-day peak.
However, with the US Fed rate decision slated for Sept 18, recent markets movements suggest that bull traders are taking a sit-and-watch trading approach, reluctant to place new LONG bets, as the markets away the Fed decision.
The chart shows how the Grayscale announcement on Sept 12 propelled XRP into 12.63% gains. But since XRP hit the $0.60 mark, on Friday Sept 13, bull traders began to scale back on their buying pressure, leaving room for bears to force an instant correction.
At the time of writing on Sept 16,XRP price dropped as low as $0.56 within the daily timeframe, reflecting a 6.60% dip within the last 48 hours.
Bears Mount $31M Leverage SHORT Positions Against XRP
Majority of market analysts anticipate a rate cut to spark demand across risk assets markets. However, the recent market trends show that bear traders are increasingly mounting SHORT positions against XRP in hopes that a disappoint Fed rate outcome could spark a massive market downturn.
As depicted in the chart, XRP bears have deployed leverage positions worth $31.92 million in cumulative short liquidation, dwarfing the cumulative long liquidation positions at $21.89 million. This $10 million disparity between short and long contracts indicates clear bearish momentum in XRP’s derivatives market, with short positions outweighing longs by approximately 46%.
This significant gap in favor of the shorts suggests a pessimistic outlook, as traders are positioning themselves to capitalize on a potential price decline. If the Fed’s decision does not meet market expectations, the bearish sentiment could amplify, leading to further downward pressure on XRP prices in the days ahead.
XRP Price Forecast: Can Bulls Hold $0.55 Support?
XRP has shown mixed price action, with recent speculative-driven gains stalling at $0.58. The Relative Strength Index (RSI) sits at 52.62, indicating neutral momentum, while leaning slightly overbought. This suggests that buying pressure may be losing steam, and a near-term pullback is possible unless renewed bullish sentiment arises.
The Donchian Channel (DC) indicator sets key support at $0.55, a crucial level to maintain to avoid further downside.
Resistance remains firm at $0.60, marking a significant barrier that XRP needs to break for a bullish continuation. However, failure to hold $0.55 could trigger a drop toward the lower bound at $0.50.
While current market gains are driven by speculative trading activity, a U.S. Federal Reserve rate cut could validate the bullish conviction, potentially leading to an accelerated breakout toward the next key resistance at $0.65. For now, the technicals suggest cautious optimism, with midterm bearish risks if support falters.
About the Author
Ibrahim Ajibadeauthor
Ibrahim Ajibade Ademolawa is a seasoned research analyst with a background in Commercial Banking and Web3 startups, specializing in DeFi and TradFi analysis. He holds a B.A. in Economics and is pursuing an MSc in Blockchain.
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