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    XRP price rally to $0.70 looks likely despite mass profit-taking

    Source Fxstreet
    Mar 5, 2024 07:34
    • XRP price rallied to $0.66 despite holders realizing over $320 million in gains in March.
    • Retail traders realize gains, shedding XRP holdings while institutions and large entities accumulate the altcoin. 
    • XRP price increased over 16% on a weekly basis and 23% on a monthly basis.

    XRP price climbed to a high of $0.6685 on Tuesday, before correcting to $0.6410. XRP price appears to be on an uptrend following the recent rally in Bitcoin, sustaining above the psychologically important level of $0.60.

    The recent XRP rally seems to be sustained by large wallets, which have accumulated XRP since the beginning of March, according to on-chain data. Meanwhile, while retail traders appear to be taking profits from the recent price increase. 

    Also read: XRP price eyes $0.70 target, attorney states Ripple’s influence on the altcoin is on a decline

    Daily digest market movers: XRP traders realize gains

    • Data from crypto intelligence tracker Santiment shows that XRP holders have realized more than $320 million in gains since the beginning of March. Despite this big amount of profit-taking, the altcoin has rallied to a new year-to-date high of $0.6685 early on Tuesday. 
    • Holders of more than 1 billion XRP tokens have added to their holdings since March 1, while wallet addresses in two cohorts (10 million to 100 million, and 100 million to 1 billion) shed their XRP holdings, likely realizing gains. This indicates the recent rally in XRP is likely driven by large entities rather than retail traders. 

    XRP holdings

    XRP holdings of different cohorts. Source: Santiment

    • Retail traders and two segments of XRP whales have engaged in profit-taking, as evidenced by the spikes in Network Realized Profit/Loss metric (NPL). Strong spikes in a coin’s NPL indicate that its holders are on average selling their bags at a significant profit. Generally, a spike of this metric after a rally, which is the case with XRP, could indicate profit-taking, and hence, it can be viewed as a sell signal. 

    XRP

    XRP Network Realized Profit/Loss. Source: Santiment 

    • XRP price gains are likely catalyzed by the anticipation surrounding a likely XRP ETF. While there is no officially plan for an ETF yet, the cryptic interview comment by BlackRock CEO Larry Fink, “I can’t comment on that (XRP ETF),” has generated interest in the community.
    • Other catalysts fueling XRP gains are capital inflow from market participants that realize gains in assets like Bitcoin and rising utility for XRPLedger’s native token. 
    • The SEC v. Ripple legal battle has an important deadline coming up on March 22, when the regulator will file its opening brief. This marks an important event in the lawsuit, after the SEC’s request for a delay in the timeline of the legal battle between the two entities.

    Technical Analysis: Towards December 2023 peak

    XRP price is in an uptrend, close to its December 2023 peak of $0.70. The altcoin’s price increased on Tuesday, hitting the $0.6685 level, a new yearly high. XRP price’s uptrend is supported by both the Moving Average Convergence/Divergence (MACD) indicator and the Awesome Oscillator (AO). 

    The green bars on the two indicators signal that there is positive momentum supporting the altcoin’s uptrend. XRP price could hit its $0.70 target before making its way to the November 2023 peak of $0.75. 

    XRP

    XRP/USDT 1-day chart

    However, a daily candlestick close below $0.6293, which aligns with the 78.6% Fibonacci retracement of its rally to $0.6685, could invalidate the bullish thesis for XRP. In case of a fall, the altcoin could find support at the 61.8% Fibonacci retracement at $0.5985.

    Cryptocurrency metrics FAQs

    The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.

    Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.

    Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.

    Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.

     

    Disclaimer: For information purposes only. Past performance is not indicative of future results.
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