Let’s assume the worst-case scenario for XRP: that the current drop is not just a temporary and minor correction, but constitutes an abandonment of the uptrend. To what prices would the cryptocurrency issued by Ripple fall if that happened?
According to the theory of supports and resistances—which is detailed in depth in Criptopedia, the educational section of CriptoNoticias—what was once a resistance tends to become support later on. Furthermore, these Supports and resistances tend to repeat themselves over time due to market psychology.
Taking this into account, observing a historical chart of the XRP price (such as the one presented below) allows us to estimate which price levels have a high chance of becoming supports for XRP, in the hypothetical case that the cryptocurrency continues its bearish trend.
As can be seen, XRP is right now in a historic support zone around $1.30 (yellow horizontal line). At this point, supply and demand are currently reaching a balance, causing the price of XRP to remain relatively stable.
But, if supply were the winning force, XRP would go lower. You will probably find support in the area of $1.15 (red horizontal line). In both 2018 and 2021, the Ripple cryptocurrency was lateralizing for some days around that mark.
What if XRP continued to fall further than $1.15the next strong support would be near $0.90 (blue horizontal line). As seen in the image, it is a price area that on numerous occasions functioned as support or resistance for this cryptocurrency.
There are still bullish expectations for XRP
While the likelihood of the XRP price falling further cannot be ruled out, it is also important to show that there are fundamental reasons to think this might not happen.
On November 21, CriptoNoticias published “5 fundamental reasons why the price of XRP will continue to rise.” Certain factors that could continue to push the price of XRP are detailed there:
1) Favorable political environment: Donald Trump’s victory in the US elections generates optimism in the market, supported by his promise of friendly regulations and a pro-innovation approach.
2) Changes in the SEC: The imminent departure of Gary Gensler as head of the SEC opens the door to a clearer and more favorable regulatory stance towards cryptocurrencies, which would benefit Ripple Labs.
3) XRP ETF on the way?: Three companies have applied to launch XRP-based exchange-traded funds. If approved, they would increase the accessibility and liquidity of the asset, favoring its price.
4) Lawsuits against the SEC: US states sue the regulator for alleged excessive persecution of the cryptocurrency sector. A favorable ruling could establish precedents and reduce regulatory risks.
5) Pro-cryptocurrency Congress: With a Republican-controlled Congress, the advancement of laws like FIT21 would facilitate a clearer framework for cryptocurrencies, incentivizing institutional investment.
On top of all this, Ripple Labs is moving forward with innovative projects such as the RLUSD stablecoin and tools for CBDC, strengthening its position in the sector. With these conditions, the outlook for XRP looks promising beyond the (probably temporary) bearish corrections that its cryptocurrency may suffer.
