Ripple’s cross-border token was hit hard after the US Senate’s failure to advance the CLARITY Act, dumping from a weekly peak of $1.50 to under $1.30 before it rebounded to just over the latter.

Analysts now point to improving momentum and a possible rotation toward altcoins, which aligns with a major technical signal tailored for XRP.

XRP Has to Defend This Zone

Ali Martinez believes the immediate battle is straightforward: the cross-border token has to defend the $1.31-$1.35 support before a stronger move can unfold. The area is now acting as a key short-term support region, with the asset repeatedly hovering around it following this week’s selloff.

This is particularly important now as leveraged traders have started stepping back again after this week’s deleveraging, when the futures open interest dropped by over 20% in a few days. This suggests some speculative positions have been flushed out following the regulatory and macro volatility. Lower leverage can reduce immediate upside momentum, but it can also leave the market less vulnerable to another cascade of forced liquidations.

Fellow analyst Bird, meanwhile, highlighted improving conditions for altcoins, with traders increasingly watching whether capital begins rotating away from Bitcoin. XRP has already shown signs of relative strength by slightly outperforming BTC during Friday’s rebound. However, it now has to overcome the next resistance area at $1.38-$1.40, followed by the more meaningful one near $1.50-$1.54, which halted its progress days ago.

Another Bullish Signal Incoming?

XRP’s 5-day moving average is approaching the 200-day moving average, putting the asset close to forming a golden cross. The indicator is traditionally viewed as a bullish momentum signal, although it should not be treated as a guarantee of further gains. What matters here is the timing.

If the asset manages to defend the $1.31-$1.35 region, reclaims $1.40, and eventually breaks through the aforementioned $1.50 area while the broader altcoin momentum strengthens, the technical backdrop would look significantly healthier than it did after the 8% daily drop to under $1.30 earlier this week.

Nevertheless, these are a lot of “ifs,” which are yet to be confirmed. At the same time, several other altcoins have posted major gains over the past few days, while XRP has stayed somewhat behind.

Source: CryptoPotato