XRP Drops 35% in Two Months Amid Trade War, Policy Shifts

XRP, the cryptocurrency associated with Ripple, has been experiencing a significant downturn in recent weeks. The overall crypto market has seen a decline, with major altcoins like XRP facing losses between 7-9%. This downturn is attributed to rising tensions in the U.S.-China trade war, an executive order blocking taxpayer money from buying altcoins, and a massive $616 million in liquidations, mostly from long positions.

XRP has been particularly hard hit, dropping from its all-time high of $3.40 on January 16 to $2.18, marking a 35% decline over two months. This drop has significantly reduced the number of XRP tokens held in profit. On-chain data indicates that XRP’s supply in profit has shrunk by 6.39 billion tokens in just a week, reaching its lowest level this year. The increasing number of investors holding XRP at a loss suggests growing selling pressure and weak market sentiment, which could push prices even lower.

A key factor behind XRP’s weak performance is the lack of new demand. Data shows that only 4,516 new wallet addresses were created on Sunday to trade XRP—the lowest daily count recorded this year. This indicates a slowdown in fresh investments, meaning fewer traders are entering the market. When new demand drops, trading activity slows down, and support for the token weakens. If this trend continues, it could make it difficult for XRP to recover in the short term.

On the technical side, XRP has been trading below a descending trendline since its all-time high, forming a bearish pattern of lower highs. This means sellers are still in control, and the token is struggling to gain upward momentum. If XRP fails to break above this resistance level, it could continue its downward trend. Currently, XRP is hovering around $2.17, and if the selling pressure intensifies, it could drop below $2, possibly testing support levels at $1.47.

For XRP to reverse this trend, it needs strong buying pressure to break above the descending trendline. If it manages to do so, the next major resistance level is at $2.93. A breakout above this point could signal a potential recovery. However, with demand at a yearly low and bearish sentiment dominating, XRP faces a tough battle ahead