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XRP struggles at $2.04: Why a breakout is unlikely right now
Despite short-term strength, the cryptocurrency market is witnessing mixed signals as it continues to grapple with uncertainty. Amidst the turmoil, Ripple’s XRP has been displaying some notable moves in recent times. While the price bounced back from $1.79 to reach $1.99, this 11.49% daily gain has not led to a structural breakout.
XRP’s current situation is quite concerning as it remains confined within a falling wedge pattern that has persisted for several months now. The bears are gaining strength as the cryptocurrency struggled to make any headway past the crucial resistance level of $2.04.
The rejection at this level can be attributed to strong selling pressure and limited bullish momentum, which only strengthens the bearish outlook. Unless XRP achieves a decisive daily close above $2.04, it’s likely that the trend will continue in the downward direction.
Moreover, other on-chain metrics are painting a gloomy picture for XRP enthusiasts. The price Daily Active Addresses (DAA) divergence is at -273%, highlighting a significant disconnection between the token’s valuation and user activity. This lack of engagement from users further reinforces the notion that this rally lacks long-term credibility.
The absence of strong address growth weakens the confidence in this move, casting doubt on its sustainability. Unless there is an upsurge in engagement, it seems unlikely that XRP will break through this critical resistance level anytime soon.
Additionally, whale transactions have been noticed, particularly a massive transaction of 230,770,000 XRP worth over $414 million moved between unknown wallets. This large-scale movement often reflects internal rebalancing, institutional shifts or off-exchange activities. However, without further clarity, it only introduces uncertainty rather than confirming accumulation or distribution trends.
Furthermore, the liquidation data has revealed a significant $2.1 million in long positions were wiped out compared to just $705K in shorts, signaling aggressive bullish exposure. If XRP continues to face rejection at $2.04, more long liquidations could occur, amplifying the downward pressure.
In conclusion, it seems highly unlikely that XRP will breach this resistance level anytime soon. The cryptocurrency’s current situation is marred by a multitude of red flags, including weak on-chain metrics, lack of user engagement and aggressive exposure to leveraged positions.
Source: https://ambcrypto.com/xrp-struggles-at-2-04-why-a-breakout-is-unlikely-right-now/
