XRP's Supply in Profit Plummets to Year-Low as Prices Drop 35% from Peak

XRP has shown a significant downtrend since reaching an all-time high of $3.40 on January 16. Currently, it is trading at $2.18, representing a price decline of 35% within the last two months.

This notable drop has caused a decline in the number of XRP tokens held at a profit. Data from on-chain analytics indicates a growing bearish sentiment towards the asset, suggesting a potential continuation of this downward trajectory.

XRP Experiences Fall in New Demand, Indicating Market Interest Decline

As the price of XRP decreases, the total supply of tokens in profit has also diminished. Recent findings from Santiment reveal a reduction of 6.39 billion tokens over the past week, reaching its lowest point for the year.

Currently, 87.95 billion out of a total supply of 99.98 billion tokens are held at a profit. This situation indicates that some investors are beginning to incur losses, which has resulted in increased selling pressure and a weakened market sentiment.

Additionally, on-chain metrics indicate a downturn in fresh demand, with daily new purchases of XRP experiencing a sharp decline this month. Only 4,516 new wallet addresses were registered on Sunday for XRP trading, marking the least amount of new demand since the start of the year.

Declining Demand Impacts Trading Activity

A reduction in new demand often signifies that fewer investors are willing to purchase the asset, which can lead to decreased trading activity and diminished price support in the open market. For XRP, this reduced interest could pave the way for additional price reductions if selling pressure remains elevated.

XRP Faces Selling Pressure: Can the Bulls Reverses the Downtrend?

Analysis on the daily chart shows that XRP has been trading below a descending trend line since striking its all-time high, indicating the ongoing bearish trend. This pattern occurs when an asset's price consistently posts lower highs over a period, suggesting that sellers have manifest control over the market. Without breaking above this trend line, further declines seem probable.

As of now, XRP is priced at $2.17, significantly beneath the descending trend line. With a strengthening bearish outlook, the token could see further declines, potentially dropping below $2 to around $1.47.

However, if buying interest picks up, there remains a possibility for XRP to break above this descending trend line, potentially climbing back to $2.93.