XRP price continued its downward trend, currently trading slightly around $1.1 after dropping more than 14% this week. As bullish momentum and trading activity weakens, on-chain reports reveal that the market is now dominated by bearish pressure and extreme fear, uncertainty, and doubt (FUD). While most would expect these negative trends to further harm price action, crypto market intelligence platform Santiment suggests otherwise, stating that the current negative feeling could create the conditions for an essential recovery.
Why Extreme FUD can be a good sign for XRP price
In a recent X post, Santiment announcement that XRP Crowd FUD reached its highest level in three weeks. Data shows that the ratio of positive and negative comments about the altcoin on social media has fallen to just 1.1 bullish comments for every 1 bearish comment. This suggests that market sentiment is becoming increasingly negative as prices continue to fall and the bullish structure weakens.
Notably, crowd sentiment fell into negative territory around May 25. However, Santiment said that level of fear and skepticism has been alleviated. historically contrary to XRP price direction and general market expectations.
The crypto analytics firm explained that when traders on social media platforms like selling pressure this had weighed on price developments. Therefore, this creates the ideal conditions to support a potential rebound, as panic fades and stronger holders begin to stabilize prices.
Pointing to the attached chart, Santiment revealed that during previous declines into the FUD zone, the price of XRP often interrupted its decline and even climbed to higher levels. This unusual but recurring trend is why the crypto research firm suggests that the current extreme FUD around the altcoin could be a good signal for its price, strengthening the possibility of a much-needed rebound.
At the same time, Santiment pointed out that deep FUD zones are also present. attractive purchasing opportunities. In other words, while many market participants view XRP’s $1.1 price level as bearish, opportunistic investors may see it as an opportunity to buy low in anticipation of a strong rally.
Price behavior when the market enters the FOMO zone
Santiment also pointed out in his article that extreme optimism in the market can have the opposite effect of a fear-driven rally. According to the report, when the price of XRP enters the Fear of missing out (FOMO) zone, this shows that traders are becoming overconfident and buying aggressively.
These conditions usually appear near historic highs or local peaks, where most traders are already very optimistic. With so many buyers already in the market, there are fewer new participants to keep the momentum going. As a result, the rally may end quickly, potentially pushing XRP price to new lows.
Featured image from Freepik, graphic from Tradingview.com
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