The Ripple (XRP) and Stellar Lumens (XLM) prices suffered a big reversal this week, erasing some of the gains made last week. The XRP price dropped to $3.12, a 15% decline from its highest point this month.
Similarly, the XLM token retreated to $0.4158, which is also significantly lower than its year-to-date high of $0.5152. These declines have led to millions of dollars in losses among market participants.
XRP and XLM prices have plunged after the two jumped by double digits last week following the signing of the GENIUS Act, which is set to take effect on January 18, 2027, or 120 days after the signing.
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The two are some of the top cryptocurrencies set to benefit from this law. That’s because Ripple Labs runs Ripple USD (RLUSD), one of the top stablecoins in the crypto industry, while Stellar’s business is built upon stablecoin payments.
Therefore, since there was no Stellar or Ripple-specific news, the potential reason for the crash is that investors are selling in response to the GENIUS Act news. It is common for assets to rally ahead of a major news event and then plunge when it finally happens.
The other reason is that investors are simply taking profits after these tokens jumped by double digits. The XLM price increased by 135% from its lowest level in June, while the XRP price rose by almost 100%.
Furthermore, the prices of XLM and XRP are falling as sentiment in the cryptocurrency market deteriorates. Bitcoin price dropped to $117,500, while top altcoins like Tron, Solana, and Dogecoin pulled back by over 3% today.
XRP Price Forming Handle Section of the C&H Pattern
Another potential reason for the XRP price decline is that it is in the process of forming the handle section of the cup-and-handle pattern. C&H is a popular continuation pattern comprising a rounded bottom and some consolidation that forms the handle part.
In XRP’s case, the upper side of the cup is at $3.40, while its lower side is at $1.6130, its lowest level since April this year, giving it a depth of about 52%.
For the C&H pattern to work out well, it must have a handle, which is now forming. A handle can be in the form of a horizontal consolidation or a brief pullback.
Therefore, it is likely that the XRP price will rebound in the coming weeks or months. Measuring 52% from the upper side yields a target price of $5.18.
XLM is dropping because of its close correlation with XRP. The two often move in sync because Jed McCaleb, a co-founder of Ripple Labs, founded Stellar. They are also involved in the payment industry.
Looking forward, XRP and XLM have some of the best fundamentals and technicals, raising the possibility that they will pull back soon.
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