After a vicious crash, XRP recently saw one of the most dramatic price swings in its history, recovering 42%. The chart's enormous knife caused the asset to fall below important support levels before rapidly rising again. This move offered a nearly 50% profit in a very short period of time for traders who were able to catch the bottom.
But such high volatility raises questions about XRP's long-term stability, so it is not always a good thing. The precipitous decline led to panic-selling, which caused XRP to fall below two important support levels that had previously held firm: $2.62 and $2.16. The market became uncertain as a result of the quick breach of these levels, and even with the quick recovery, XRP is currently in a precarious position.
Technically speaking, it appears that buyers may not be as strong as they were during earlier uptrends given how quickly XRP lost those supports. The 200 EMA offers an additional layer of possible support at the $1.60 level, which XRP may revisit if momentum wanes. The 42% bounce raises questions about future stability even though it indicates demand at lower prices.
The market may quickly lose faith in XRP if it is unable to sustain its current levels above $2.00. The level of $2.16 becomes the next crucial area to keep an eye on if XRP is unable to maintain this level. On the positive side, a return above $3.00 would indicate that buyers are returning to the market and that the recovery is genuine.
Until that time, XRP is still in a shaky position, and the price could drop again with a fresh round of selling. For now, XRP's historic recovery serves as a warning of impending trouble as well as a testament to its tenacity. Traders should keep a close eye out for confirmation of either another decline or a sustained recovery.
