XRP at a Crossroads: Price Consolidation Signals Market Uncertainty, Futures Traders Prepare for Rally

• XRP shows bearish signs as Chaikin Money Flow (CMF) indicates a liquidity exit from the market. 

• Also, most of the transactions involving XRP in the last seven days resulted in a loss with the daily ratio of XRP transaction volume displaying a reading of 0.97. 

Ripple’s XRP bearish sentiment continues as it struggles to break back into the $0.50 zone. At press time, the altcoin was trading at $0.49 after surging by 0.5% in the last 24 hours and declining by 3.8% in the last seven days. 

Technically, there is uncertainty around its next price movement as it trades close to its 20-day exponential moving average (EMA) in the past few days. In most cases, this is interpreted as a consolidation phase as it signals a relative balance between buying and selling. Per the current reading, neither buyers nor sellers have a key advantage over the market as crucial momentum indicators move closer to their respective centre lines. Our observation shows that the Relative Strength Index (RSI) currently reads 50.13, while its Money Flow Index is 44.44. 

Indicators Paint Blurry Future

According to the RSI indicator, the XRP value is currently in a state of neutrality as it is neither overbought nor oversold. For the Chaikin Money Flow (CMF), XRP was positioned on the zero line and in a downtrend. This basically means there is a liquidity exit from the altcoin market. This indicator is mostly used since it measures the flow of money into and out of an asset.

Just as the current XRP reading, a position of zero or less indicates capital exit from the market. This is a bearish signal and hints at an impending price fall. The bearish extension also comes at a time when Ripple releases a staggering 150 million XRP ($78 million) from its reserves. According to a Crypto News Flash report, a total of 410,239,560 XRP ($213 million) was transferred across multiple exchanges in just 24 hours. 

Reason for the XRP Capital Exit

In investigating the reason for the capital exit, it was found that most of the transactions involving XRP resulted in losses last week. Our assessment of the daily ratio of XRP transaction volume in profit to loss showed a value of 0.97. This implies that for every transaction that resulted in a loss in the last seven days, only 0.97 ended in profit. 

Contrary to the direction of the XRP’s price movement and the negative reading of key indicators, open Interest in XRP’s futures market has seen a significant increase since the beginning of the month. According to Coinglass data, the value has increased by 7% to reach $661 million. 

For explanation, the token’s futures open interest measures the total number of outstanding futures contracts. In other words, it measures positions that have not been closed or settled. An increasing number indicates that more traders are entering the market and opening new positions.

The XRP funding rate indicates that these traders are mostly opening long positions, implying that most XRP futures traders are purchasing the coin with the expectation that the price will grow in the future. Fascinatingly, this expectation falls in line with Egrag Crypto’s prediction that XRP may successfully break out of its symmetrical triangle and record a 41% surge as witnessed in 2017.