As a seasoned analyst with years of experience navigating the volatile crypto market, I find myself cautiously bearish on XRP at this juncture. The recent 28.8% plunge in XRP price, coupled with forced liquidations and a negative funding rate, paints a grim picture for the coin. If history repeats itself, we might see XRP test the $0.4 support level again, which could lead to an even steeper decline if it breaks.
On Monday, the cost of XRP dropped by approximately 15.4%, mirroring a broader decline in the cryptocurrency market. Notably, Bitcoin and Ethereum, two major digital assets, have decreased by around 14-16% and are currently trading at $51,000 and $2,243 respectively. The recent sell-off might be connected to a general market correction, as Japan’s index experienced a 12% drop following the Bank of Japan (BOJ) increasing interest rates to combat inflation. With growing apprehension about a potential recession, here are some possible explanations for why XRP could slide down to $0.4.
Forced Liquidations and Bearish Funding Rate Exacerbate Sell-Off
Over the past six days, the price of XRP has dropped significantly, going from $0.627 to $0.448, which represents a substantial decrease of about 28.8%. As a result of these declines, long position holders have faced approximately $30 million in mandatory sell-offs based on data from Coinglass. This surge in forced liquidations has led to an influx of sell orders within the market, exacerbating the demand imbalance and increasing supply pressure.
In addition, the data from XRP‘s derivative market indicates a Funding Rate of -0.0064, calculated as Open Interest (OI) weighted. This negative rate implies that those who are short selling XRP incur costs to maintain their positions. This suggests a strong bearish sentiment and anticipation that the price could continue falling.
EMA Death Cross Imminent on Daily Chart
During this persistent adjustment period, the XRP day-to-day graph indicates that the 50-day Exponential Moving Average is about to dip below the 200-day Moving Average. This “death cross” pattern suggests a significant indication that might strengthen the existing bearish trend.
While the 100-day and 200-day Exponential Moving Averages suggest a relatively stable trend, the fact that the coin’s price is currently below these levels implies that the sellers might be dominating the market.
Triangle Pattern Brings Major Support For XRP Price
As a seasoned cryptocurrency investor with over a decade of experience, I have seen many market cycles and trends unfold before my eyes. Based on my observations, the weekly chart of XRP seems to be hinting at another bearish reversal within a symmetrical triangle pattern that has been forming since September 2021.
Should history follow a similar pattern, the value of the coin appears set for an approximately 12.5% decrease to re-touch the support formed by the triangle around $0.4. Dropping beneath this support could potentially trigger a significant decline in the value of this asset.
Instead, the downward trajectory has functioned as a robust area of accumulation for cryptocurrency purchasers since December 2020. Should this support persist, the altcoin might increase by more than 50% to confront an upper trendline at approximately $0.61.
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2024-08-05 16:38