XRP Drops 35% Amid Bearish Patterns, Institutional Optimism Persists

XRP, the cryptocurrency associated with Ripple, is currently facing significant challenges as bearish patterns emerge, causing concern among holders. The asset's instability is attributed to negative on-chain factors and a slow start to the anticipated altcoin season. Despite these issues, institutional investors remain optimistic about the long-term prospects of XRP, citing favorable regulatory developments in the United States and global markets.

On-chain data reveals that XRP's Net Unrealized Profit/Loss (NUPL) ratio is trending downward after a period of sideways trading. This metric is crucial for crypto traders as it indicates the paper profit or loss of an asset over time, providing insights into market sentiment and potential short-term corrections. Following a strong rally at the beginning of the year that saw XRP reach $3.40, the asset experienced a sharp decline of over 35%, dropping to $2.10. This plunge has negatively impacted the NUPL for new users, with historical data showing similar patterns during previous significant drops. For instance, in 2018, XRP traded above $3 before plummeting by 90% to $0.30 as the NUPL turned bearish. A comparable situation occurred after the 2021 bull run, where XRP spiked to $1.90 before falling to around $0.50 due to regulatory challenges following an SEC lawsuit against Ripple and its executives. The NUPL also declined during this period, indicating increased sell pressure.

This month, the NUPL has fallen into the "denial" zone, which could trigger price drops that erase recent gains. Many traders view the asset's decline below the $2 level as a potential resistance, hindering the altcoin season. However, positive regulatory developments in the United States, including the creation of a crypto task force, have boosted investor confidence in the market. Institutional investors are optimistic about the long-term outlook for XRP, citing these regulatory leanings as a positive factor.

Crypto prices have significantly decreased from their Q4 highs, which were driven by institutional interest and community enthusiasm. The past 30 days have seen a reversal of this trend, with outflows increasing due to whale hedging losses. As a result, both Bitcoin (BTC) and altcoins have experienced substantial institutional exits. However, the next quarter holds promise as bulls anticipate several altcoin ETF approvals that could drive market growth. For XRP, increased institutional volumes could lead to a reversal. According to the analyst's forecast, XRP shows signs of reversal after hitting strong support near $2.1000, with buyers gradually regaining control. If momentum builds, the price is likely to retest $2.2235 and aim for a breakout toward higher resistance levels, signaling a bullish move ahead.