Correlation with Bitcoin decreases, XRP price struggles to recover

XRP has recently witnessed a slowdown in its price increase, following a period of continuous price growth. This altcoin, which previously benefited from strong investor interest, has begun to lose some of its growth momentum.

Despite the price decline, some market experts believe that investor support strength could prevent XRP from experiencing significant short-term losses.

XRP Loses Bitcoin Support

The correlation between XRP and Bitcoin has significantly decreased, dropping to 0.4. This is the lowest level since February this year.

History shows that when this correlation weakens, XRP's price has dropped considerably, falling by 22%. However, the asset subsequently recovered.

With Bitcoin recently reaching its All-Time-High (ATH), the decreased correlation can be seen as a sign of weakened support for XRP.

Bitcoin's strong performance typically can uplift altcoins, including XRP. However, this disconnection raises concerns that XRP may not successfully leverage Bitcoin's success. As the correlation continues to decline, XRP may face more challenges in the coming weeks.

Contrary to the weakening correlation with Bitcoin, XRP investor behavior shows a more stable trend. The total XRP supply inactive for 3-6 months has been steadily increasing this month.

This indicates that short-term holders (STH) are maturing and becoming medium-term holders. This transition is a positive sign, as it demonstrates increasing stability and investor confidence in XRP.

The increase in inactive XRP supply suggests that many investors are holding their tokens instead of selling them. This long-term holding behavior can provide a buffer against short-term price volatility and help maintain the asset's value during unstable periods.

XRP Price May Recover

XRP is currently trading at $2.26, having slipped below the $2.27 support level in the past 24 hours. The price has been steadily declining over the past two weeks, mainly due to failure to break through the $2.58 resistance level.

This indicates that the upward momentum is slowing down, and the price may continue to face downward pressure.

If this price decline continues, XRP may test the next support level at $2.12, which would mark a significant loss for investors. Further price reduction could increase negative sentiment and lead to more selling pressure.

However, if investor support strengthens and stabilizes the price, XRP could maintain the $2.27 support level. This would allow for a potential recovery to $2.38 or even higher, nullifying the current negative outlook.

This support could pave the way for a new attempt to break through the $2.58 resistance level and potentially push the price higher.