The cryptocurrency market is undergoing a correction following an excellent start to the week.
Bitcoin, the leading cryptocurrency by market cap, briefly dropped below $90k after losing 2.5% of its value.
XRP, the native coin of the Ripple ecosystem, is the worst performer among the top 10 cryptocurrencies by market cap, down 7% in the last 24 hours.
The bearish performance has seen XRP reverse the gains made from the start of the year.
Profit takers currently take centre stage in the market, which could see XRP record further losses in the near term.
However, if the bulls regain control and XRP reclaims $2.2, the coin could retest the $2.5 psychological level.
XRP dips below $2.1 amid profit-taking
XRP is the worst performer among the top 10 cryptocurrencies by market cap after losing 7% of its value in the last 24 hours.
The bearish performance is supported by on-chain data.
Currently, the Spent Output Profit Ratio (SOPR) on-chain metric, computed by dividing realized value (price sold) and the value of XRP at creation (price paid), is resetting, indicating that investors are taking profit.
Data obtained from Glassnode shows that the metric read 1.05 as of Tuesday, down from 1.08 the previous day.
Further decline below 1.0 could see XRP enter the oversold territory, creating fresh opportunities for investors to enter long positions.
Despite the bearish performance, XRP ETFs continue to record inflows.
XRP ETFs recorded $19 million in inflow on Tuesday, down from the $46 million recorded on Monday.
Since their debut in November, US-listed XRP ETFs have cumulative inflows of $1.25 billion and related net assets of $1.62 billion.
However, the funds broke their perfect inflow streak on Wednesday.
US spot XRP exchange-traded funds recorded their first day of net outflows on Wednesday, snapping a 36-day streak during which the products had avoided any daily redemptions, according to data from SoSoValue.
The five US-listed XRP ETFs posted combined net outflows of $40.8 million on Wednesday.
XRP could drop below $2.0 if the selloff continues
The XRP/USD 4-hour chart is bearish after the coin lost 7% of its value in the last 24 hours.
At press time, XRP has declined below the short-term support provided by the 100-day Exponential Moving Average (EMA) at $2.22.
The decline to $2.08 happened after XRP encountered resistance around the 200-day EMA at $2.34 and a descending trendline on the daily chart.
The MACD lines are approaching the bearish territory thanks to the ongoing sell-off.
The Relative Strength Index (RSI) has fallen to 55 on the 4-hour chart from a brief ascent into overbought territory, indicating fading bullish momentum.
A further decline toward the midline could keep the trend bearish and increase the odds of XRP sliding below the support level at $1.98.
Closing below this crucial support level could see XRP retest the $1.81 zone for the first time since December 31st.
However, if the bullish trend returns, the coin could retest the $2.2 resistance level, with the daily resistance of $2.34 also in play.
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