XRP Price Drops 5% Today as Bearish On-Chain Metrics and Technical Indicators Weigh Heavily on the Altcoin

XRP price dropped sharply on Wednesday, facing strong selling pressure from both technical indicators and on-chain metrics. The altcoin faced heavy liquidations, with over $4.5 million in long positions being liquidated.

What Happened: XRP price fell 4.8% over the last 24 hours, trading at $2.33 at press time. The world’s seventh-largest cryptocurrency witnessed a broader market decline, where the total crypto market cap fell 6.5% to reach $3.35 trillion, according to CoinMarketCap.

The price drop was accompanied by a 114% surge in trading volume, highlighting significant sell-side activity.

$4.5 Million in XRP Long Positions Liquidated: Massive liquidations in XRP’s derivatives market have fueled the price decline.

Data from CoinGlass showed that over $12.92 million worth of long positions were liquidated in the past 24 hours, compared to only $3.86 million in short positions.

This forced selling has intensified the downward pressure, contributing to XRP’s price drop.

The last time XRP faced such high levels of long liquidations was between Dec. 18 and Dec. 20, leading to a 23% price drop.

During that period, over $72.6 million in long positions were liquidated, ultimately leading XRP to a local low of $1.95 on Dec. 21.

Adding to the bearish sentiment, XRP’s funding rates turned negative, dropping from 0.21% on Jan. 7 to -0.11% on Jan. 8.

A negative funding rate indicates increased short interest and declining demand for long positions, with open interest dropping by $300 million in the same period.

Long-Term Holders Offloading XRP: On-chain data revealed that long-term holders are contributing to the sell-off.

According to Santiment, XRP’s Dormant Circulation Supply (356D) — which tracks tokens that have remained unmoved for over a year — spiked from 8.3 million on Jan. 4 to reach 208.3 million by Jan. 7.

This suggests that long-term XRP investors sold over $467 million worth of the altcoin, adding significant selling pressure and contributing to the 7.2% price drop since Jan. 4.

Key Technical Levels to Watch for XRP: A glance at XRP’s price chart on TradingView showed the altcoin facing strong resistance at the upper boundary of a descending parallel channel, currently at $2.45.

If bulls fail to flip this level into support, the altcoin risks further decline to $2.15, supported by the 50-day Simple Moving Average (SMA).

A break below $2.15 could lead to a deeper drop toward $2.00.

The Relative Strength Index (RSI) currently sits at 53, suggesting a neutral stance and leaving room for a breakout in either direction.

For a bullish reversal, XRP needs to overcome the $2.45 resistance level.

Outlook for XRP Price: Despite the current bearish momentum, some analysts remained optimistic.

Highlighting XRP’s potential bull flag formation, crypto analyst Steph Is Crypto predicted that the altcoin could still break out and reach $5.60.

“If XRP can close above $2.40, it will set up a bull flag for a potential move to $3.00 and $3.3. XRP could still break out of this bull flag and reach $5.60,” the analyst said.