XRP Price Faces Risk of Major Crash

The XRP price may be at significant risk of a big crash this year, even as it faces major catalysts in the coming months. Ripple has formed a head and shoulders chart pattern, a popular bearish signal in the market that points to double-digit losses in the coming weeks.

XRP Price Has Formed a Risky Pattern

The daily chart shows that the XRP price has formed a high-risk chart pattern that may push it lower in the coming weeks. The head and shoulders pattern features a neckline at $2 and a head at the year-to-date high of $3.40, with the right and left shoulders at $2.88.

XRP has also fallen below the 50-day Exponential Moving Average (EMA), indicating that bearish momentum is increasing. A drop below the crucial support level at $2 would reinforce this bearish outlook and suggest further declines in the upcoming weeks.

Such a crash could target the key support level at $1.1395, the 78.2% Fibonacci Retracement level, implying a potential 50% drop from its current level. The bullish outlook would be dismissed if the coin rebounds above the right shoulder at $2.74, aligning with the 23.6% Fibonacci Retracement.

Wyckoff Theory Suggests Ripple May Crash

An additional factor explaining why the XRP price might crash soon is known as the Wyckoff Theory. This nearly century-old theory describes how asset prices evolve over time. Richard Wyckoff asserts that assets tend to consolidate for extended periods before transitioning into a markup phase, which is sparked by increased demand over supply or FOMO.

In the case of XRP, the initial spark was the victory of Donald Trump and the anticipated dropping of SEC charges against Ripple. This led to a rise in social sentiment and a jump in the price to $3.41.

Recently, XRP appears to be in the distribution phase of the Wyckoff Theory, characterized by volatility and standoff between bulls and bears. A break below the head and shoulders neckline would initiate a markdown phase, typically marked by panic selling.

Good XRP News Has Been Priced In

XRP’s price may plunge despite Ripple receiving favorable news. One piece of potentially good news is the SEC’s likely abandonment of its appeal against Ripple Labs. The SEC has already dismissed lawsuits against companies like Coinbase and Uniswap, entering a review of similar cases.

Moreover, the SEC is poised to approve a spot Ripple ETF later this year, which could facilitate more inflows from Wall Street investors, similar to trends seen with Bitcoin and Ethereum.

Additionally, the XRP Ledger is expanding and attracting developers. Despite good news potentially arising, the XRP price may still crash, as these developments are already factored into the market. This means they may not surprise investors when they occur.

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