Long term XRP holders may help the price break out of the downtrend in 3 weeks.

XRP has faced a significant recent drop, hitting a low of $2.07 before attempting a slight bounce back. Although this altcoin is currently showing signs of recovery, it may face challenges in breaking free from the downtrend that has lasted for three weeks.

However, the main holders, especially the long-term holder (LTH), can play an important role in supporting the potential breakout.

XRP investors are selling

According to data from Santiment, the Long/Short MVRV divergence indicator has recently returned to the positive zone after nearly a month, signaling an increase in profits from long-term holders (LTH).

Long-term holders (LTH) are generally more patient with their investments compared to short-term holders (STH), which means they are less likely to sell during short-term fluctuations.

Therefore, the belief of STH holding XRP creates a stable momentum against a sharp price fall. The fact that LTH maintains their positions may also provide the necessary support for the bounce back, potentially lifting XRP out of the current downtrend.

XRP Long/Short MVRV Spread | Source: SantimentHowever, the macro momentum of XRP shows some warning signs. The Coin Days Destroyed indicator (CDD) has recently surged to its highest level since January, indicating that these holders are selling off. This could negatively impact the price of XRP.

This could be a signal indicating that some investors are taking profits or expressing concerns about the short-term performance of altcoin.

The continued increase of CDD will lead to selling pressure, limiting the bounce back ability of XRP and may result in deeper downtrend action.

XRP Coin Days Destroyed | Source: Glassnode## Can XRP breakout?

XRP has fallen for three consecutive weeks, marking the third time this has happened.

Altcoin has recently increased by 5% over the past 5 days, reaching $2.24. Despite this increase, XRP continues to face pressure from the overall market and internal selling pressure. This causes it to continue to weaken further without strong support.

A large number of long-term holders making profits is a promising signal for a potential bounce back. However, they need to limit profit-taking to trigger a continuous upward movement of XRP.

If LTH does not sell during this critical period, XRP could flip $2.27 into support, paving the way for a move towards $2.38.

XRP Price Analysis | Source: TradingViewHowever, if selling pressure continues, the altcoin may not break the downtrend. This could cause XRP to return to $2.12 or even lower.

Monitoring the behavior of holders in the coming days will be crucial to determine the short-term direction of this altcoin.

Vincent