XRP's Road So Far
- XRP hit a high point of $2.65 earlier this week, only to slide back to $2.51 as the overall crypto market momentum seemed to cool off.
- The past couple of weeks had seen XRP climbing steadily from a support level around $2.12, mirroring a positive mood in the broader crypto space.
Global Market Momentum
- Positive news like the recent US-China trade truce and the recent bilateral trade agreement between the US and UK have helped global markets show signs of recovery.
Network Growth Worries
- A major cause for concern is the shrinking XRP network activity. The Sentiment's Network Activity metric indicates a drop from around 16,000 active addresses in January to approximately 3,400 as of May 7th, reflecting fewer new addresses and reduced user engagement on the XRP Ledger.
Ripple's Recurring Ride
- Since hitting a peak of $3.40 in January, XRP plummeted to $1.61 before making a partial recovery to its current price of around $2.53.
- With declining network metrics, XRP's growth could face some hurdles.
The Derivatives Market Struggle
- The derivatives market for XRP is witnessing stress signals. Recent data shows a whopping $10.14 million in liquidations over the last 24 hours, with long positions accounting for $8.44 million compared to only $1.69 million in shorts.
- Trading volume has also decreased to $8.69 million, down from around $19.5 million on Monday, indicating liquefying markets. Open interest has seen a minor decline of 1% to $5.41 billion, hinting at some unwinding of leveraged positions.
Technical Signals Mixed
- Despite the concerns, XRP's price remains above major moving averages, providing a strong technical foundation.
- The Moving Average Convergence Divergence (MACD) indicator is still bullish, with green histograms pointing towards sustained bullish momentum.
- However, the Relative Strength Index (RSI) stands at 63.34 and is moving towards the midline of 50, suggesting a weakening trend in the short term.
Potential Price Levels
- If the correction continues, look for the price finding support at the $2.48 level. If it falls below these, preparatory support might be found at the 50-day EMA at $2.27, the 100-day EMA at $2.25, and the 200-day EMA at $2.00.
- Conversely, XRP faces resistance near $2.55, with further hurdles at $2.58 and $2.60. A break above $2.60 could push the price towards the recent high of $2.65, with further targets at $2.72 and $2.75.
Hourly Chart Projections
- The hourly chart indicates a break below a key bullish trend line with support at $2.55, signaling temporary weakness. However, as long as the price maintains above the $2.48 support level, another upturn remains possible.
Will Ripple's Value at $2.48 Hold Up Against Bearish Pressure Following Wednesday's High?
In essence, the immediate price action for XRP will depend on its ability to hold key support levels while navigating the challenges of declining network activity and pressures from the derivatives market.
Investing in XRP might face challenges due to its shrinking network activity and stress signals in the derivatives market. Despite these concerns, the cryptocurrency's price remains above major moving averages, offering a strong technical foundation and the potential for bullish momentum. However, the RSI is moving towards the midline, suggesting a weakening trend in the short term, and if the correction continues, support might be found at the $2.48 level.
