The XRP price recorded a sharp decline in recent sessions, triggering a wave of panic selling across the market. The depreciation intensified the bearish sentiment, as investors sought to limit their losses.
However, this aggressive move pushed XRP into a region considered oversold, a scenario that often attracts buyers looking for short-term recovery opportunities.
XRP investors sell to avoid losses
On-chain data on profit and loss volume indicates that losses dominated XRP trading activities over the past 20 days. Many investors sold during brief rallies, attempting to exit positions near the breakeven point. With the downward trend continuing, selling pressure increased to avoid further losses.
Last week, loss-driven selling intensified. A significant portion of XRP transfers occurred below investors' acquisition cost, reflecting fear rather than a planned strategy. Historically, these conditions indicate capitulation phases, when less resilient investors exit the market, which is likely in the current token scenario.
The Money Flow Index, which tracks buying and selling pressure based on price and volume, entered the oversold range in the past 24 hours. The move indicates that the intensity of selling pressure may be exhausting.
Similar oversold readings have previously provided tactical opportunities for buyers. When panic selling reaches its peak, attentive value investors tend to begin accumulation. Although this does not guarantee a reversal in XRP's trend, short-term rebounds are often supported as selling pressure diminishes and demand stabilizes.
XRP price may recover recent losses
XRP is currently trading near $2.14 at the time of this analysis, showing initial signs of short-term recovery. Fibonacci retracement levels, drawn between the recent high and low, serve as important reference zones. The current scenario suggests buyers are attempting to regain control after the oversold signal.
An altcoin has already consolidated support above the 23.6% Fibonacci level. Maintaining this range strengthens the recovery outlook. A confirmed trend change would depend on XRP surpassing the 61.8% Fibonacci level, around $2.27, turning it into support. This would open the way to $2.41, aiding in the recent recovery of losses.
Downside risks persist if support weakens. If the token fails to hold above the 23.6% Fibonacci level, it could face a new selling wave. In that case, the price may drop to $2.03. Losing this level would likely push XRP below the psychological support of $2.00, prolonging the decline and invalidating the optimistic scenario.
The XRP article approaches $2 as oversold signals indicate a possible rally, first seen on BeInCrypto Brasil.