
XRP is down around 10.25% to reach $0.81 on Jan. 27. Several factors contributed to this downturn, reflecting both broader market dynamics and specific technical analysis developments related to XRP.
They include:
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A broader crypto and stock market sell-off amid China’s DeepSeek artificial intelligence startup buzz.
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The wipeout of overleveraged long positions in the XRP Futures market.
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XRP eyeing a bull flag breakout despite its intraday correction.
XRP/USD four-hour price chart. Source: TradingView
China’s DeepSeek sparks cross-market AI rout
XRP’s drop accompanied similar declines in the broader crypto market, led by Bitcoin’s (BTC) return below the $100,000 threshold.
As it happened:
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The crypto market’s intraday declines mirrored downside sentiments across the US stocks, primarily tech companies.
TOTAL vs. XRP/USD, Nasdaq 100 futures on Dec. 27. Source: TradingView
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China’s artificial intelligence startup, DeepSeek, has garnered significant attention for its cost-effective performance.
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The model operates efficiently on less-advanced chips, challenging the need for high-end hardware.
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Concerns have emerged about the valuation of companies like Nvidia, which rely heavily on demand for premium chips.
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Nasdaq 100 futures dropped 3.4%, while S&P 500 futures slid 2%.
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XRP price dropped in tandem as its 30-week average correlation coefficient with Nasdaq 100 has surged to 0.78, the highest since September 2023.
XRP/USD and Nasdaq 30-week average correlation coefficient. Source: TradingView
Nearly $33M in XRP longs liquidated
XRP’s price drop has triggered significant liquidations in the derivatives market, signaling strong bearish pressure.
Key points:
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Over the last 24 hours, $32.92 million worth of long XRP positions were liquidated, compared to just over $3 million in short liquidations.
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Bullish traders are forced to sell their positions when long positions are liquidated.
Crypto market liquidations ft. XRP (as of Jan. 27). Source: CoinGlass
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XRP’s price declined due to the cascading liquidation effect.
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The scale of these liquidations is reminiscent of the Dec. 18-20 period, when $72.6 million in long positions were wiped out, causing a 23% price drop to a low of $1.95.
XRP decline part of bullish continuation pattern
XRP, nevertheless, remains in line with a bullish continuation pattern that indicates a potential rebound ahead despite short-term losses.
Key points:
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XRP forming a potential bull flag pattern, indicating the possibility of regaining bullish momentum if key support levels hold.
XRP/USD daily price chart. Source: TradingView
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The bull flag developed after XRP’s rally from $1.90 to a local high of $3.94 in early January, confirming a larger symmetrical triangle breakout.
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The consolidation within the bull flag has XRP trading in a descending channel, with today’s decline nearing critical support levels, including the 0.786 Fibonacci retracement at $2.69.
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A breakout above the flag’s upper trendline, currently around $3.10, could trigger another rally.
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The bull flag’s upside target for February, derived from the height of the previous rally, is approximately $4, near the symmetrical triangle breakout target of $3.77.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.