An ominous-sounding technical pattern has appeared on XRP's short-term charts, namely the one-hour and four-hour price charts.
The simple moving average (SMA) 50 has crossed below the simple moving average (SMA) 200 for both price charts, confirming a "death cross," a bearish indicator indicating that the short-term price downturn could become a more sustained downtrend.
One might say that the death cross has arrived just in time for bears, considering the drastic price drop seen for XRP in 2024's first week after Bitcoin spot ETF rejection rumors spooked the market.
XRP swiftly plunged to two-month lows of $0.50 from about $0.61 as the crypto market saw a drastic drop on Jan. 3. The sixth-largest cryptocurrency subsequently ran into offers below the daily MA 50 and 200 at $0.619 and $0.579, respectively.
At the time of writing, XRP was down 2.02% in the last 24 hours to $0.566. XRP might be set to close its first red week in 2024, already down 8%, according to TradingView data.
Why is it not concerning?
Some experts consider the death cross to be an unreliable indicator because it is based on backward-looking moving averages, lags prices and has proven to be a contrarian signal.
While a death cross in theory predicts a deeper sell-off, historical data shows that most XRP death crosses have marked major or intermediate market bottoms.
This could be because death crosses are defined as occurring after a quick fall and hence are unreliable as independent markers. The market might have been oversold by the time the crossover occurs.
In the event of a market comeback, the bulls must beat the Dec. 28 high of $0.658. If the declines continue, the XRP price may return to the Jan. 3 lows of $0.50.