XRP's $2.20 Breach Could Spark 30% Price Drop

XRP, the third-largest cryptocurrency by market capitalization, has been trading sideways between $2.50 and $2.30, with the price dropping below $2.40. Analysts have warned that a breach of the critical $2.20 support level could trigger a significant correction, potentially leading to a 30% drop in the altcoin's price.

Dom, an XRP markets analyst, has highlighted a trend involving exponential moving average (EMA) bands that have historically triggered a short-term bearish move or potentially a market top in previous bull markets. As illustrated in the daily chart, whenever XRP's price has closed a position under the 50-day and 100-day EMA bands, the altcoin has witnessed a minimum 30% correction and a short-term bear market. Between 2017 and 2021, XRP price dropping below the 50-100 day EMA bands has been a strong bear signal.

If XRP closes a daily candle below its $2.20 support level, it may drop as low as $1.50 to $1.60 in the coming weeks. However, the analyst added that the altcoin continued to experience continuous spot inflows from Coinbase, Bitstamp, and Bitfinex traders. The downside was that Binance traders had yet to make a significant move since Feb. 7. Dom noted that Binance's spot market activity has a significant impact on XRP's price movements.

XRP has consolidated sideways since Feb. 7, with the overall trend moving toward a bearish directional bias. However, the altcoin remains in no man's land until the price breaks above $2.50 or below $2.30. Currently, liquidity remains at both demand and supply areas for XRP, which means these levels will potentially dictate XRP's movement. With price testing the resistance at $2.50 three times over the past week, the best scenario for XRP will be to take demand zone liquidity under $2.32 before moving toward $2.50.

With CPI data coming higher than expected, inflation pressure remains a concern. Thus, the Federal Reserve is unlikely to cut interest rates anytime soon. The highest CPI data since June 2024 will also keep investors in