XRP Could Be Creating 'Massive Bear Trap' Following June's Monthly Opening, Analyst Claims
As XRP slides to $1.25, market participants monitor crucial support zones while experts caution that June may determine the token's next significant price movement.
Following a widespread cryptocurrency market downturn on Tuesday, XRP (XRP) retreated to the $1.25 level, wiping out price increases accumulated since the beginning of February.
Key takeaways:
- Following widespread market liquidations, XRP retreated to $1.25, putting pressure on a significant long-term trend line and the 50-month exponential moving average support zone.
- Traders anticipate potential moves toward $1 and lower levels due to weakening support, though some analysts believe a "bear trap" may be developing.
- XRP has traditionally underperformed during June, with market participants now increasing positions anticipating a decline beneath $1.20.
XRP price movement hints at potential "bear trap"
According to TradingView data, XRP commenced June trading at $0.33, positioned marginally beneath the 50-month exponential moving average (EMA).
Perhaps more significantly, XRP currently trades "directly on/slightly below the White MACRO Trend Line," according to analyst Egrag Crypto in a Monday X platform post, making reference to the multi-year upward trend line that has provided price support dating back to 2017.
Historical patterns reveal that when XRP initiates monthly trading beneath the 50 EMA amid macro-level corrections, the "structure often begins to form a bottoming zone," as demonstrated in the accompanying chart. At present, the asset trades below the macro trend line. Historical precedent from 2020, 2023 and 2024 suggests the price could briefly drop below this level before staging a recovery.
"The market is leaning heavily bearish," Egrag Crypto stated, further adding:
"If XRP reclaims the 50 EMA and the Macro trend line, this setup could become one of the biggest bear traps of the cycle."
According to analyst ChartNerd, potential new local bottoms could materialize in the $0.70-$0.90 range.
"Many of you admire this beautiful $XRP fractal, which leaves the door open to a $0.90/$0.70 XRP before any major reversal," the analyst explained in a post accompanying a chart illustrating a possible bottom formation area for XRP.
Another analyst, Kamile Uray, identified the $1.26-$1.30 range as a critical support area that buyers must hold to avoid a more significant downturn extending to $0.94-$1.11.
According to previous Cointelegraph coverage, XRP may decline to retest the Feb. 6 bottom at $1.11, followed by the round-number psychological support level at $1 following the breach of the $1.27 support zone.
Historical data shows June typically brings XRP losses
Compounding challenges for bullish traders, XRP historically experiences difficulty during June. Data reveals that since 2014, the token has finished June with losses in eight out of the last 12 years, averaging approximately −5% returns.
The negative June performance becomes even more severe in years when XRP concluded May in negative territory, based on statistics from Cryptorank.
Historical data illustrated in the chart reveals substantially larger losses during bear market cycles, including 2018's -23.8% decline and 2022's -21.5% downturn.
The exceptional -34.4% June 2021 decline represents an anomaly attributed to the US Securities and Exchange Commission's legal action against Ripple, which negatively impacted XRP's valuation for an extended period.
Should historical patterns repeat themselves, XRP's price trajectory may continue declining throughout June, with a potential rebound potentially commencing in July.