Why is XRP price down today?

XRP is down around 10.25% to reach $0.81 on Jan. 27. Several factors contributed to this downturn, reflecting both broader market dynamics and specific technical analysis developments related to XRP. They include:A broader crypto and stock market sell-off amid China’s DeepSeek artificial intelligence startup buzz.The wipeout of overleveraged long positions in the XRP Futures market.XRP eyeing a bull flag breakout despite its intraday correction.China’s DeepSeek sparks cross-market AI routXRP’s drop accompanied similar declines in the broader crypto market, led by Bitcoin’s (BTC) return below the $100,000 threshold.As it happened:The crypto market’s intraday declines mirrored downside sentiments across the US stocks, primarily tech companies.China’s artificial intelligence startup, DeepSeek, has garnered significant attention for its cost-effective performance.The model operates efficiently on less-advanced chips, challenging the need for high-end hardware.Concerns have emerged about the valuation of companies like Nvidia, which rely heavily on demand for premium chips.Nasdaq 100 futures dropped 3.4%, while S&P 500 futures slid 2%.XRP price dropped in tandem as its 30-week average correlation coefficient with Nasdaq 100 has surged to 0.78, the highest since September 2023.Nearly $33M in XRP longs liquidatedXRP’s price drop has triggered significant liquidations in the derivatives market, signaling strong bearish pressure.Key points: Over the last 24 hours, $32.92 million worth of long XRP positions were liquidated, compared to just over $3 million in short liquidations.Bullish traders are forced to sell their positions when long positions are liquidated.XRP’s price declined due to the cascading liquidation effect.The scale of these liquidations is reminiscent of the Dec. 18-20 period, when $72.6 million in long positions were wiped out, causing a 23% price drop to a low of $1.95.XRP decline part of bullish continuation patternXRP, nevertheless, remains in line with a bullish continuation pattern that indicates a potential rebound ahead despite short-term losses.Key points: XRP forming a potential bull flag pattern, indicating the possibility of regaining bullish momentum if key support levels hold.The bull flag developed after XRP’s rally from $1.90 to a local high of $3.94 in early January, confirming a larger symmetrical triangle breakout.The consolidation within the bull flag has XRP trading in a descending channel, with today’s decline nearing critical support levels, including the 0.786 Fibonacci retracement at $2.69.A breakout above the flag’s upper trendline, currently around $3.10, could trigger another rally.The bull flag’s upside target for February, derived from the height of the previous rally, is approximately $4, near the symmetrical triangle breakout target of $3.77.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.