The price of the native token of the XRP Ledger, XRP, could soon face a significant sell-off scenario where its price plunges by around 38% to $0.34, if a key support level that is currently holding eventually gives in.

That’s according to popular cryptocurrency analyst Ali Martinez, who shared on the microblogging platform X (formerly known as Twitter) a post showing that XRP’s support at around $0.55 is currently being tested, and noting that if it fails to hold investors should “be prepared for a possible sell-off scenario.”

According to Martinez, that scenario could see XRP plunged to th $0.34 mark, a low that it hasn’t seen in over a year. XRP’s price surged over 45% over the last 12 months amid a wider cryptocurrency market surge associated with expectations surrounding the launch of spot Bitcoin exchange-traded funds (ETFs) in the US.

After their launch, the price of Bitcoin and most other major cryptocurrencies started stalling and falling slightly. XRP has lost around 9% of its value over the last week as a result, after failing to breach above the $1 mark during the bull run last year.

The range of the parallel channel used by Martinez has been maintained since 2022, even with the token rising to near the $1 mark in July of last year, up from its $0.33 low seein in late December 2022.

Currently, XRP is contending to stay above $0.55, testing the lower boundary of this trend line. A break below this range could lead to revisiting multi-year lows, posing significant risks for the token.

As CryptoGlobe reported, XRP has recently reached a new milestone when it comes to the number of wallets on the network, as it has recently surpassed the 5 million mark, a notable increase from last year’s start of 4 million.

Recently, XRP transactions have also seen a surge, maintaining numbers well over 5 million since the start of the year, further pointing to the cryptocurrency’s growing adoption.  evertheless, a cryptocurrency analyst has suggested it could keep climbing to potentially reach $27 per token in a significant rise following Ripple’s legal victories over the U.S. Securities and Exchange Commission (SEC).

In 2020, Ripple faced a lawsuit from the SEC for supposedly breaching U.S. securities regulations by selling XRP without first registering with the agency.

Judge Analise Torres determined that XRP was indeed a security when Ripple initially sold it to institutional investors, but not when it was sold to the general public.

Judge Torres’ primary reasoning was that institutional investors who purchased XRP from Ripple likely understood that it possessed certain characteristics of a security. However, this information was not necessarily available to those who acquired XRP through cryptocurrency exchanges.

Featured image via Unsplash.