XRP Price Prediction: Why XRP Risks a Drop Below $0.50

XRP has been experiencing a downward trend since Jan. 12, and today is no different. The price of the cross-border payments token has dropped over 14% to $0.50. The reasons for this decline are both technical in nature and influenced by market sentiment.

A spot XRP ETF may not be coming

The decline in XRP's price over the last few weeks followed the discussion around the possibility of a post XRP exchange-traded fund (ETF) being allowed in the U.S..

Recently, the XRP army was hoping the world's largest asset manager Blackrock would launch a spot XRP ETF in the near future.

These hopes were crushed on Jan. 18 when the firm clarified that there were no plans to launch such an investment product in the near future.

Citing "people with direct knowledge of the matter," Fox Business journalist Charles Gasparino shared this news through a post on X, saying, "@BlackRock has no plans for a spot $XRP ETF."

This dashed any expectations the market had for increased exposure to XRP. Speculation on a spot XRP ETF was previously sparked by a comment from BlackRock CEO Larry Fink during a Fox Business interview.

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 causing the price to drop over 10% since the clarification.

XRP's supply among whales drop

XRPs decline so far coincides with a decline in the supply held by its largest investors. Data from market intelligence firm Santiment shows a notable decrease in the XRP supply held by addresses with balances ranging between 100 million to 1 billion tokens (green).

This reduction aligns with a rise in the supply held by investors who possess between 10 million and 100 million tokens (black)

XRP supply distribution. Source: Santiment

This trend suggests that large holders within the 100-million-to-1-billion XRP balance group have actively sold or redistributed their XRP holdings, contributing to the sell-side pressure.

XRP technicals point to further downside

From a technical point of view, XRP's ongoing decline is part of a broader downtrend that typically started when the price spiked to areas above $0.9 after a U.S. court declared XRP is not a security.

From the daily chart below, it seems when the price tests a multi-month descending trendline resistance as shown, it turns down.

XRP/USD daily chart. Source: TradingView

XRP's most recent retest of the trendline came on Nov. 13; its price has fallen by about 33% since.

As of Jan. 25, this cryptocurrency is navigating another crucial technical threshold — a multi-month ascending trendline support at $0.50. This particular support level has historically marked the onset of more extensive recoveries in the past months.

However, a daily candlestick close below this level would trigger massive sell orders that would see the price drop toward the next major support level at $0.35.

On the other hand, the price is trading below key moving averages and the relative strength index (RSI) is suggesting potentially oversold conditions. This could further attract buyers looking for a bargain at current levels.