XRP price faced a sharp decline in recent sessions, triggering a wave of panic selling across the market. The decline strengthened the bearish mood as investors scrambled to limit losses.
However, this aggressive selling has pushed XRP into oversold territory, a situation that often attracts market buyers looking for an opportunity for a short-term recovery.
XRP holders sell to prevent losses
On-chain profit-to-loss volume data shows that losses have dominated XRP trading activity over the past 20 days. Many investors initially sold during temporary price increases in hopes of exiting their positions as they approached break-even. As the downtrend continued, selling pressure increased to avoid further drawdowns.
Sponsored Sponsored
The sell-off due to losses has further accelerated over the past week. The majority of XRP transfers are made below investors’ cost basis, reflecting fear rather than strategic repositioning. Historically, such situations indicate a capitulation phase, where weak hands exit the market. This is likely to be the case with XRP currently.
Want more token insights like this? Sign up for Editor Harsh Notariya’s Daily Crypto Newsletter here.
The money flow index, which tracks buying and selling pressure using price and volume, fell into oversold territory within the past 24 hours. This indicates that the selling momentum may have reached exhaustion.
Similar oversold readings have created tactical entry points for buyers in the past. When panic selling reaches its peak, value-oriented participants often start accumulating. While this does not guarantee a trend reversal for XRP, it often supports a short-term price rebound as supply pressure eases and demand stabilizes.
XRP price can recover recent losses
XRP is trading around $2.14 at the time of writing, showing early signs of a near-term recovery. Fibonacci retracement levels drawn from recent swing highs to swing lows provide an important reference zone. The current structure suggests that buyers are trying to take back control after receiving an oversold signal.
The altcoin has already established support above the 23.6% Fibonacci level. Maintaining this zone strengthens recovery prospects. For a bullish shift to be confirmed, XRP needs to flip to support at the 61.8% Fibonacci level near $2.27. Achieving that would pave the way for $2.41 and help reverse recent losses.
Downside risk remains if support weakens. Failure to maintain the 23.6% Fibonacci level will expose XRP to another round of selling. In that scenario, the price could retreat to $2.03. A loss of this level will likely push XRP below the psychological support of $2.00, widening the decline and potentially invalidating the bullish theory.
