XRP Faces Bearish Momentum but Recovery Signs Emerge Amid Regulatory Uncertainty

• XRP continues to face significant challenges, having seen a nearly 30% decrease over the past month, now trading below $3 amidst strong bearish sentiment.

• The Directional Movement Index (DMI) indicates a profound bearish trend, evidenced by an Average Directional Index (ADX) climbing above 35, reflecting renewed selling pressure.

• Interestingly, active addresses for XRP are showing signs of recovery, which may hint at a potential rebound in price amid the turbulent market conditions.

This article analyzes XRP’s current market conditions, focusing on the recent price decline, DMI trends, and potential recovery signals from active user addresses.

XRP DMI Shows the Lack of a Clear Direction

XRP’s Directional Movement Index (DMI) reveals that its Average Directional Index (ADX) is currently at 36.98, a significant increase from 15.89 just four days ago. The ADX serves as a trend strength indicator, measuring the intensity of the trend without indicating its direction. Typically, an ADX value above 25 signals a strong trend, while a reading below 20 indicates a weak or non-trending market.

With XRP’s ADX rising sharply above 35, it suggests that the ongoing downtrend is gaining momentum. This increase indicates that market participants are showcasing stronger conviction, making the existing trend more likely to continue.

Meanwhile, XRP’s +DI (Positive Directional Indicator) is at 11.4, down from a high of 15.1 just two days ago, indicating diminishing bullish pressure. In contrast, the -DI (Negative Directional Indicator) has declined to 21.6 from 37.2 on February 2, showing a decrease in bearish momentum. Despite the reduction in bearish pressure, the -DI remains above the +DI, confirming that the downtrend is still intact.

The widening gap between the ADX and the directional indicators further suggests that the downward trend is robust and persistent. Until the +DI crosses above the -DI, signaling a potential trend reversal, XRP is likely to remain in a bearish phase.

XRP Active Addresses Are Recovering After Reaching Its Lowest Level In 3 Months

The number of 7-day XRP Active Addresses plummeted from 407,000 on January 20 to about 186,000 on February 19, marking the lowest level since November 2024. This metric is crucial because it reflects user engagement and overall network activity, directly correlating with demand for XRP. A decline in active addresses suggests reduced interest and bearish sentiment, while an increase signals growing participation and potential buying pressure.

Recently, XRP Active Addresses have begun to recover, now reaching 236,000—an increase of 26.8% in just one week. This boost suggests that user activity is ramping up, reflecting renewed interest in the network. Historically, a rise in active addresses often precedes price recoveries, as increased participation typically leads to higher demand.

XRP’s Uptrend Largely Depends on the SEC and Ripple Lawsuit

XRP’s exponential moving average (EMA) lines currently exhibit a bearish alignment, with shorter-term lines positioned below longer-term ones. The price has been trading below $3 since February 1, indicating continued downward momentum. If this trend persists, XRP could test two significant support levels at $2.15 and $2.06. Should these levels be breached, XRP’s price might fall to $1.77, dipping below $2 for the first time since November 2024.

Nevertheless, a trend reversal could be on the horizon, particularly if the SEC drops its lawsuit against Ripple in March. Recently, the SEC has eased its regulatory stances by dropping cases against other major players like Gemini, Uniswap, Robinhood, and Coinbase. If a resolution is reached regarding the lawsuit, it could catalyze an uptrend for XRP, pushing towards resistance levels at $2.36 and $2.52. Breaking these resistance points may allow XRP to extend its rally towards $2.71, potentially reversing the current bearish outlook.

Conclusion

In summary, XRP is experiencing significant market volatility characterized by a clear bearish trend and declining price action. The Directional Movement Index indicates strong selling pressure, although recent activity among active addresses suggests potential optimism. The future trajectory of XRP heavily hinges on regulatory developments, particularly any changes in the ongoing lawsuit with the SEC. Investors and stakeholders should monitor these factors closely as they could significantly influence market sentiment and XRP’s price in the coming weeks.