XRP is one of the cryptocurrencies that has been worst affected by the bear market that followed the massive parabolic bull run in late-2017 as it is currently trading just a hair above its 2018 lows of roughly $0.25.
Despite its poor price performance over the past couple of weeks and months, the number of short positions against XRP have been diving as of late, which signals that traders are largely expecting the crypto to find some support around its current price levels.
XRP Struggles to Break Above $0.27
At the time of writing, XRP is trading up nominally at its current price of $0.269, which marks a slight climb from its monthly lows of just below $0.26.
Earlier this month, XRP plunged below its previous support level of $0.30, which marks a significant drawback that likely led to some technical damage to the cryptocurrency.
After this plunge, investors lost a significant amount of confidence in the crypto and the amount of outstanding short positions on Bitfinex skyrocketed from roughly 7.3 million shorts to highs of nearly 23 million shorts.
In the time since, however, the amount of outstanding XRP short positions has nosedived to roughly 13.8 million, which signals that traders are beginning to believe that the crypto has found a bottom that will hold as a strong level of support.
Just How Low Can the Embattled Crypto Fall?
Although traders may be growing increasingly confident in XRP’s near-term price action, it is important to note that $0.27 has grown to be a strong level of resistance that the crypto has failed to decisively break above on multiple occasions.
Right after the crypto plunged below its previous support level at $0.30, prominent analyst and trader Peter Brandt explained in a tweet that $0.24 is a key support level, and a break below this level could lead XRP as low as $0.0207, which would mark a 92% decrease from its current price.
“Will Ripple be able to manipulate the market to keep $XRP above .2400? A serious breakdown at this level, and .020725 is in the cards,” he explained.
A pullback this significant may be slightly unrealistic as of now, but Brandt’s analysis does show that the crypto is currently trading just slightly above a support level of critical importance, and any major shift in the aggregated crypto market could force XRP to incur another steep pullback.