XRP is at risk of losing the $2 mark as the number of profitable wallets has bottomed out since the beginning of the year.

XRP has undergone a prolonged decline throughout the past month, pushing the number of profitable wallets down to the lowest level of the year on March 31.

This downward plunge indicates increasing selling pressure as pessimistic sentiment continues to dominate the market.

XRP Investors Face Increasing Losses

Amid the wave of declining XRP prices, the number of wallets holding this token in profit has dropped significantly, reaching the lowest level since the beginning of the year, with only 5.24 million on March 31. This trend reflects the selling pressure still weighing heavily on altcoins, as more and more investors fall into a state of loss due to the prolonged downward trend.

The number of profitable XRP addresses | Source: GlassnodeIn comparison, the number of profitable XRP wallet addresses peaked at 6.04 million on March 2nd but has been continuously shrinking since then.

This decline could increase selling pressure on XRP, as profits fall, many investors may decide to sell to cut their losses, further consolidating the price decline. If this trend continues, XRP risks prolonging its decline.

Moreover, the stable negative funding rate of XRP further reinforces the negative outlook. At the time of writing, the funding rate of this token is at -0.007%, reflecting the trend of traders prioritizing short positions.

Funding rate of XRP | Source: SantimentThe funding rate is a periodic fee exchanged between Long and Short traders in perpetual futures contracts to maintain price equilibrium with the spot market. When the funding rate is negative, Short positions must pay fees to Long positions, indicating overwhelming selling pressure and a market sentiment leaning towards a bearish trend.

This development reflects a lack of confidence in the short-term recovery potential of XRP, putting the asset at risk of a deeper price decline.

XRP is at a decisive moment as it trades on a key support level

At the time of writing, XRP is trading at $2.11, above the important support level of $2.03. If selling pressure continues to increase and XRP breaks this support level, the downward momentum will be intensified, potentially causing the token to drop below $2, heading towards $1.77.

XRP/USDT Daily Chart | Source: TradingViewConversely, if XRP registers a new wave of demand, the negative outlook will be invalidated. In this scenario, the price of the token could recover and rise to $2.27.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making decisions. We are not responsible for your investment decisions.

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