The price of XRP is flashing strong warning signs, as bearish technical patterns and weakening network activity suggest a potential sharp decline. Currently trading around $2.13, XRP could see a drop to as low as $1.20 if key support levels fail to hold.

Bearish Chart Pattern Signals Breakdown

XRP’s daily chart is showing a descending triangle pattern, typically seen as a bearish signal, especially when formed after a strong rally. The structure features a flat support base with a downward-sloping resistance line and has been developing since late 2024.

XRP Daily Active Addresses. Source: Glassnode

If XRP breaks below the lower support of this pattern, the price could fall by as much as the triangle’s height, projecting a potential target near $1.20—a 45% decline from current levels. A failure to hold above the key 50-day and 100-day simple moving averages, currently at $2.18 and $2.06, respectively, would likely confirm the breakdown.

$2.00 Level Holds Psychological Importance

XRP is currently hovering near the critical psychological support of $2.00. If this level fails to hold, the selling pressure may accelerate, dragging the price closer to $1.20 by the end of May. Analysts had earlier warned of a drop to $1.61 if support levels didn’t remain intact.

However, a daily close above $2.18 would invalidate the bearish triangle pattern, opening the possibility for a bullish rally toward the $3.00 mark.

Network Activity Plummets

Adding to the negative sentiment is a sharp decline in XRP Ledger’s network activity. On-chain data from Glassnode reveals a steep fall in daily active addresses (DAAs) since March. On March 19, XRP recorded 608,000 DAAs, a strong indicator of user engagement. But by early May, that figure had dropped to just 30,000.

Source: Dom

This drop suggests waning user interest and reduced transaction activity, both of which typically lead to lower liquidity and diminished buying pressure.

Traders Reposition as Selling Pressure Builds

Despite a 1.17% drop in price over the past 24 hours, daily trading volume surged by 30% to $2 billion. Analysts interpret this as possible profit-taking or strategic repositioning by traders ahead of XRP’s next move.

Crypto analyst Dom highlighted that a substantial volume of market selling over the past week has kept XRP from making sustainable upward moves. If selling continues and network activity remains low, XRP may struggle to find bullish momentum in the near term.