XRP is struggling to recover as its price action continues to mirror Bitcoin's weakness. The altcoin has failed to establish momentum in recent days, approaching the critical threshold of $2.00.
This drop driven by correlation has prevented XRP from recovering key levels, generating concern among investors.
XRP investor losses increase
The Net Unrealized Profit/Loss (NUPL) indicator highlights the increasing pressure on XRP. Recently, NUPL fell from the slightly bearish zone to below 0.25, entering the Fear zone for the first time in over a year. This indicates that unrealized profits have deteriorated significantly, leaving many investors close to or in losses.
This decline in sentiment may also act as a reversal trigger. Historically, the entry of NUPL into the Fear zone preceded accumulation periods as prices reached psychologically attractive levels. If investors interpret current conditions as oversold territory, XRP may benefit from renewed buying interest.
XRP is also witnessing significant macroeconomic changes. The Compression Momentum Indicator shows a tight compression that has been developing for almost a month. Compression reflects a period of low volatility as pressure builds within the price structure, often leading to a strong directional breakout once released.
Currently, the indicator suggests a possible inclination towards bullish momentum. If the compression resolves upwards, the token may experience a sharp expansion of volatility, giving the asset the necessary momentum to escape its recent stagnation.
XRP Price Needs to Escape
XRP is trading at $2.06 after two failed attempts to break the resistance of $2.20 this week. The altcoin is now heading towards the familiar support level of $2.02, which previously acted as a strong recovery point.
If the token experiences renewed investor confidence and a rebound from $2.02, the price may rise again to $2.20. A successful breakout above this resistance could pave the way to $2.26, supported by the potential increase in volatility indicated by the compression.
However, a breakdown remains a risk. Losing the support of $2.02 would immediately jeopardize the $2.00 level. A drop below this threshold could push XRP to $1.94 or even $1.85, invalidating the bullish outlook and indicating potential for deeper correction.
The article XRP Price Awaits Volatility Explosion That Could Save It from Falling Below $2 was first seen on BeInCrypto Brazil.
