The recent performance of Ripple (XRP) has been significantly subdued, primarily attributed to its substantial correlation with Bitcoin (BTC). Over the past two months, XRP has shown minimal price movement despite several potentially bullish events. Notably, in July, it was reported that former President Donald Trump successfully raised over $4 million in campaign donations, including contributions in XRP; nevertheless, this news failed to register any notable impact on XRP’s market price. Furthermore, on August 22, a large transfer of 33 million tokens to a Binance wallet also did not incite a substantial market reaction. Most recently, when Ripple announced plans to incorporate smart contract functionality into the XRP Ledger (XRPL), the price of XRP decreased by 3%.

This lack of responsiveness is primarily due to XRP’s pronounced correlation with Bitcoin. The correlation coefficient between the two assets stands at 0.72, indicative of a strong positive relationship. This correlation means that fluctuations in Bitcoin’s price heavily influence XRP’s price movements. For instance, in the past 24 hours, Bitcoin experienced a 4% decline, which XRP mirrored with a reduction of 3%.

Despite this downward trend, XRP’s trading volume notably increased by 39%, suggesting a negative divergence. Such divergence often signals rising selling pressure, implying that XRP may continue to face downward challenges. Additionally, a decline in the price-to-daily active address ratio further indicates increased selling activity; currently, this ratio reflects a troubling -63.81, which reveals a lack of engagement from buyers, sellers, or holders within the XRP market.

As of the current writing, XRP is trading at $0.55, with technical indicators on its 12-hour chart suggesting a potential for further decline. The Moving Average Convergence Divergence (MACD) line is situated below both its signal line and the zero line, suggesting a bearish trend that is likely to persist unless a market reversal occurs.

The Elder-Ray Index, which measures market bullish and bearish power, currently indicates that sellers are firmly in control, standing at -0.035, a condition that has been unchanged since August 26.

If the prevailing bearish sentiment continues to dominate, XRP’s price could potentially retract to $0.52. Should this support level be breached, a further descent to $0.46 may ensue. Conversely, should the market sentiment lean toward being bullish, there exists the possibility for XRP to rise to $0.56.

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