The XRP price has dropped 2.6% over the last 24 hours to trade at $0.5506 as of 2:00 am EST.

The cross border remittance token has dropped 8% over the last seven days as investors book profits and broader bearish sentiment clouds the market.

According to data from market intelligence firm Santiment, XRP is currently exhibiting historically high-risk profit levels.

They said in a Jan. 18 post on X social platform that XRP has "81% … (its) … supplies in historically high-risk profit levels compared to… (its) … averages that hover in the 55%-75% range dating back to 2018."

This means investors are booking profits on recent rallies as uncertainties kick in. If the selling continues, XRP price may drop further.

However, XRP appears primed for a recovery in the near term, primarily due to a classic bullish pattern.

XRP price to exploit a bullish wedge

In early November 2023, XRP XRP broke above the resistance at $0.60, extending a month-long uptrend. The rebound reached $0.732 on Nov. 6.

Now, XRP has been consolidating downwards in what appears to be a falling wedge. This  is a bullish chart pattern that takes place in an upward trend, and the lines slope down.

A bullish wedge resolves after the price breaks above its upper trendline while accompanying a rise in trading volumes. The pattern's breakout target is obtained by adding the distance of the widest part of the wedge to the breakout point on the upside.

In other words, a bullish target of $0.730 in Q1 for XRP price, up around 33% from current levels. This would be its highest level since July 2023.

XRP/USD daily chart. Source: TradingView

Despite this bullish outlook, it is important to note that recent attempts to push  XRP upward have been frustrated by supplier congestion from the 100-day exponential moving average (EMA), currently at $0.5925. On Jan. 17, the token lost yet another crucial support level provided by the 200-day EMA at $0.57144.

The relative strength index (RSI) moved within the negative region below the middle line. The price strength at 37 painted near overbought conditions signaling the dominance of the sellers in the market.

As such, if the sell-off continues, a key level to watch on the downside would be the $0.50 psychological level, down around 9% from the current levels.

When asked about an XRP ETF, the CEO's elusive response of "I can't talk about that!" fueled discussions and hopes among investors and analysts.

The recent developments have dampened these hopes, contributing to the bearish sentiment in the XRP market.