XRP Faces Rejection at $2.93, Retests $2.85 Support as Breakout Momentum Fades

XRP experienced a highly volatile week that was complicated by a sudden drop in prices following an unsuccessful attempt to break through the $2.90 level. Cryptocurrency that had demonstrated healthy momentum before that suffered losses rapidly as sellers determined market forces. A quick spasm of profit-taking, together with general market forces, saw XRP drop back to the $2.85 level. That level has since become a primary focus point amongst traders and analysts monitoring its ability to provide short-term support.

The dip happened during a period of heightened volatility across the entire cryptocurrency sector, compounded by international macroeconomic trends, monetary policy initiatives, and growing geopolitical tensions. XRP’s reaction to these issues reflected the market’s ongoing vulnerability to both external setbacks and sentiment among investors.

Failed Breakout and Fresh Supply Zone at $2.92 – $2.93

During the earlier part of the week, XRP attained a high of $2.93 with healthy volume, suggesting a potential breakout. However, the breakout to the upside was temporary. Strong selling pressure emerged just below the $2.93 level, and that created a new supply zone between $2.92 and $2.93. Hence, the level has transformed into a short-term resistance level where the bears continue to hold sway.

Unsuccessful breakout shows that investors quickly covered their profits after the increase in prices, which indicates a lack of confidence in a further upward movement. Strong rejection at that specific level of prices suggests that institutional players and key shareholders could have been unwinding their commitments as concern mounted throughout the market.

The $2.85 Floor in Focus

The $2.85 level has been a near-term point of demarcation for XRP. It has been a level of support a few times, but recent market dynamics suggest a continuing push being made by the sellers. XRP, if it does not hold out to remain above $2.85, technical views are a fall to $2.80 or lower.

Data from the trade demonstrated that the drop was backed by heavy volume, signaling real faith in the selloff. This movement erased nearly all profits from the previous breakout attempt, causing many traders to wonder if the recent rally was just a temporary rebound or a sign of a larger correction phase.

Greater sales pressure comes from broader market challenges

The past drop in XRP also mirrors the sectoral issues affecting the cryptocurrency market. Bitcoin and other major assets witnessed mass liquidations as global markets reacted to developments, including tensions between the U.S. and China, along with concerns over near-term policy actions from the Federal Reserve.

Macroeconomic concerns continue to impact risk assets, and cryptocurrencies are no exception to that rule. When investors switch to safer assets, the market in cryptocurrencies often tends to dry up, thus raising the chances of sudden spikes like the recent dip. Such factors have created an environment in which even strong assets like XRP tend to suffer unexpected losses.

Profit-Taking and Liquidations Reinforce the Decline

Data from CoinDesk reported that XRP saw a day-long gain of 2% which was later undone by a phase of profit-taking. This movement is consistent with analysts’ description of distribution, a phase when traders sell out of their position after a run-up.

In a recent post, the volume of XRP traded neared twice that of a typical 24 hours, passing the $86 million transaction mark. Such spikes in trade activity often mean that short-term speculators are profiting from volatility, while long-term investors may be sitting out.

Adding to the downward pressure on prices were significant liquidations that happened in the futures market. As prices dropped in the market, many leveraged longs were liquidated, requiring further sell orders that worsened the drop.

Technical Analysis and Price Determination

Technically, XRP broke out of a bull pattern to a near-term neutral-to-bearish sentiment. It has since taken the previous support level of $2.86 to become a near-term resistance level. It would require a clear close above $2.92 to re-establish a near-term bull momentum, but that does not seem likely as it stands right now.

Momentum indicators, such as the Relative Strength Index RSI, suggest a loss of upward momentum, while volume in the direction of trade signifies continued distribution. If support at $2.85 falters, the next seller target is around $2.80, a region that could attract dip buying based on a stabilisation of the larger market.

Institutional and regulative structures still do

Despite the near-term downtimes, analysts are convinced that XRP’s long-term perspective remains buttressed against institutional demand and advances toward clear regulation. Ongoing developments concerning cryptocurrency exchange-traded funds ETFs and clearer guidelines from authorities may reinvigorate institutional demand.

Ripple’s continued expansion of cross-border payments and collaboration with banks are also key to long-term fundamentals. Those trends may help XRP rally once markets digest recent volatility and macro stress eases.

Market Reaction and Investor Behavior

Trader sentiment has been divided. Some think the selloff is a natural correction when prices had extended for weeks, while others are worried XRP could be starting a larger pullback phase. Conversations across social media are a mixed bag of worry and optimism, with many waiting to see if $2.85 can hold as a level of support.

Meanwhile, activity in the cryptocurrency market remains strong, and composite volume for centralized exchanges hit an annual high of $9.72 trillion in August. With that boost in activity comes a sign that, despite the volatility, there has been ongoing demand for digital currencies.

Assumption: Volatility Defines the Modern Era

The recent XRP price action provides a good example of how sentiment can shift quickly in the cryptocurrency markets. A possible breakout bid was turned into a steep selloff in a few hours, which shows how precarious bullish situations are when macro and technical trends meet.

However, beneath the daily volatility, there is a healthy ecosystem. Institutional adoption, a positive current of regulation, and long-term usage in cross-border payments are a stable foundation for XRP.Right now, the market is holding its breath as XRP stays around $2.85. If that level holds or slides, it will likely set the stage for the asset’s next big move and could have an impact throughout the larger crypto landscape in the days to come.