XRP has found itself back under the microscope as bullish momentum is yet to return with full force. Another weekend is here, and XRP’s price action is last weekend’s flash crash, which saw the cryptocurrency register its biggest liquidation candlestick in history. 

Now, XRP is trying to recover to higher price levels above $2. Interestingly, one technical analysis warns that, before any major rebound, the price of XRP possibly down as much as 40%. While such a drop would be painful for holders, the scenario is being cast not as a permanent collapse but as a capitulation move that might precede a stronger rally.

Worst Case Scenario

What transpired last weekend in the crypto markets qualifies as the largest deleveraging event in recent memory. Leveraged positions were forcibly closed out across many exchanges, leading to cascading liquidations that sent price action into a free fall. As such, about $19 billion in positions in the span of hours.

In XRP’s case, that intense pressure led to a violent plunge that created a deep low wick to break below $1.6 on its price chart before a quick rebound above $2.2. That wick is central to the argument that the forced selling squeezed both longs and shorts, clearing excess leverage and setting the stage for price discovery to reset. However, a suggestion is that the , and that this purge might continue deeper before sentiment truly turns  bullish.

This worst-case scenario outlook is by Steph Is Crypto that envisions another possible 40% crash in the XRP price. As shown in the price chart below, XRP’s price action might fall to revisit last weekend flash crash bottom just above $1.55.

This price level may represent the deepest downside target before the market catches its footing again. If current levels give way, say if XRP loses its more immediate support zones at $2.2 and $2, the descent toward that boundary would amount to a drop of about 30 to 40%.

What’s Next After The Crash?

The wick already formed by the sudden flash crash is , but the full erosion of weak hands might still have room to run. Only after that purge can a more sustainable rebound be believable.

If the worst-case scenario plays out, the path forward would require XRP to first establish strong support near or around $1.55, shake off residual volatility, and then gather volume and momentum for the next leg upward. From here, the analyst projected an extended rally that will see th above $3.8.

At the time of writing, XRP is trading at $2.35, up by 4% in the past 24 hours.

Featured image from Getty Images, chart from TradingView