A popular sentiment that has developed over the past few days is that XRP, the third-largest crypto by market capitalization, is poised to explode higher. Top altcoins, after all, have seen strong performances over the past few weeks, with Ethereum, especially, starting to post notable gains against Bitcoin.
Luke Martin, a prominent crypto trader featured on CNN last year, summed up the hype well by posting the four charts seen below. In reference to them, he wrote:
“Major alts have high correlation, with charts often looking identical. Some lead. Some lag. But they trend together forming tops/bottoms ~ same time. EOS & XRP lagging behind up only 5% from the lows.”
These charts would suggest that barring a large sell-off in the crypto market, XRP (and EOS for that matter) is poised to achieve a considerable upside against Bitcoin.
But, not everyone is in agreement with this sentiment, pointing to four technical and fundamental reasons to back an opinion that XRP won’t be subject to the same gains as, say, Ethereum.
XRP On Edge of Price Cliff: Analysts
According to a pseudonymous trader, XRP is currently in a tough position from a technical perspective. The trader noted that the cryptocurrency is trading in a clear descending triangle pattern, a textbook formation that often resolves lower.
Indeed, a descending triangle is what predicting Bitcoin’s drop from the $6,000 support in 2018 to the $3,150 level, and is also what marked the top in 2019’s bull market. This historical precedent would suggest that while a move below the triangle isn’t imminent, XRP breaking below it would spell disaster for bulls.
The bearish sentiment over XRP’s price outlook extends to the asset’s performance against the U.S. dollar, which is the second point.
Crypto market technician Byzantine General made this sentiment clear when he shared a chart on April 13th, accentuating that XRP is in a harrowing spot from a macro perspective. The chart indicated that the cryptocurrency had seen a double rejection at a key horizontal level, and has since entered a region where there is little historical liquidity.
In reference to the chart, the analyst wrote:
“This is probably one of the scariest charts I’ve ever seen. I wouldn’t want to be bagholding this.”
Ripple Is Offloading Coins Once Again
It isn’t just the bearish charts that have crypto traders worried about XRP’s outlook.
On April 23rd, Twitter account “Whale Alert,” which tracks large cryptocurrency transactions of relevance to industry investors, found that 55,000,000 XRP (valued at more than $10 million) was transferred from the wallets of Ripple to its OTC Distribution wallet.
🚨 55,000,000 #XRP (10,712,476 USD) transferred from Ripple to Ripple OTC Distribution wallet
— Whale Alert (@whale_alert) April 23, 2020
Although Ripple vehemently denies that the sale of XRP depresses the price of the cryptocurrency, the sentiment in the market goes that any sale of the altcoin by the company is bearish.
Even if Ripple’s assertion isn’t true, the fact that the market sees otherwise may be enough to press prices lower in the near future.
Photo by Cedric Letsch on Unsplash