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More than $10.3 billion worth of XRP is currently sitting on exchange reserves representing a massive increase in exchange inflows of XRP of about 300 million in a matter of 24 hours. When the number of tokens being moved onto exchanges increases so dramatically, it typically indicates impending volatility. The way that traders and institutions respond to the abrupt liquidity build-up will determine whether that volatility is bullish or bearish.
XRP structure stabilizes
After testing the $2.77 support zone earlier this month, XRP is now trading at about $2.95, indicating a slight recovery from a market structure standpoint. The price action's strong recovery from the 100-day EMA (orange line) indicates that bulls are still holding this important level. The focus now turns to resistance at $3.07 (the 50-day EMA). It will be essential to break above this zone in order to maintain the current recovery trend.
It is impossible to overlook the influx of XRP into exchanges though. Large exchange inflows typically come before either significant sell-offs driven by profit-taking or whale-driven positioning prior to a rally. Whether the tokens are dumped into open order books or kept in reserve for market-making makes a difference. Although volumes are still quite low in comparison to the ferocious rally in July, this abrupt increase indicates that major players are getting ready to move.
XRP not that bad
XRP is in a risky but possibly bullish position, according to technicals. There is potential for momentum in either direction because the RSI at 51 is neutral. The levels at which selling previously accelerated $3.30 to $3.50 could be swiftly retested by XRP if buyers can push above $3.07.
Conversely, if $2.77 is not held, the momentum will turn bearish, with the 200-day EMA at $2.53 serving as the next crucial support. A major move is imminent, as indicated by the massive +300 million XRP injection onto exchanges. With liquidity piled on exchanges waiting to determine its next course, XRP is currently at a technical crossroads, so investors should prepare for increased volatility.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team