XRP attempts recovery amid mixed market signals
|- XRP steadies above the intraday low at $1.35 as bulls attempt to reclaim the $1.40 level as support.
- The MVRV-Z Score metric has remained in the negative territory for almost two weeks, a scenario that in the past has preceded sustained recoveries.
- XRP balance on exchanges continues to increase, hindering the chances of a recovery.
Ripple (XRP) edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.
A decisive break above the pivotal $1.40 level could ease bearish momentum and open the door to an extended recovery. However, traders should not lose sight of the next support at $1.25, as XRP is not out of the woods yet.
XRP MVRV-Z Score signals a potential bottom
XRP has sustained an overall downtrend amid price fluctuations since its record high of $3.66, reached in July. The token hit a yearly low at $1.12 on February 6 amid extremely oversold conditions. While an immediate recovery propelled XRP to $1.54 on the same day, headwinds continue to cap the upside.
Meanwhile, the MVRV-Z Score, a metric that gauges whether XRP is over or undervalued relative to its fair value, dropped into negative territory in early February, suggesting the token may have bottomed.
Although the duration of the MVRV-Z Score in the negative region varies, historical data show that sustained recoveries often precede such scenarios. For example, in July 2024, when the MVRV-Z Score hit -0.13, XRP surged from $0.45 to $2.91 in December of the same year. Hence, there’s a high probability that the remittance token has bottomed and is poised for an extended recovery, as the MVRV-Z Score remains at -0.13.
Despite the potential bullish outlook highlighted by the MVRV-Z Score, rising exchange reserves paint a conflicting picture that may hinder recovery. According to Glassnode data, the cumulative balance of the cross-border money transfer token increased to approximately 12.99 billion XRP on Thursday, following a brief dip to 12.93 billion XRP on February 8.
The upsurge, although relatively minor, warrants caution, as it increases the amount of XRP available for sale in the open market. Investors transfer their holdings to exchanges amid market volatility, intending to sell and reduce risk exposure.
Technical outlook: Can XRP steady its recovery?
XRP hovers at $1.36 and sits well below the falling 50-day Exponential Moving Average (EMA) at $1.76, the 100-day EMA at $1.97 and the 200-day EMA at $2.16. All three moving averages are sloping downward, reinforcing a bearish setup.
The Moving Average Convergence Divergence (MACD) remains below the signal line and under the zero mark. Meanwhile, the red histogram bars have been contracting, suggesting downside momentum is fading.
Still, the Relative Strength Index (RSI) at 32 (near oversold) signals subdued strength, while the descending trend line from $3.66 (all-time high) limits rebounds, with resistance seen near $2.13, keeping recovery attempts in check.
Although the MACD remains below its signal line, it is poised to cross above it. Such a scenario would prompt traders to increase risk exposure and support a stable recovery toward this week's open at $1.43. Nevertheless, XRP is not out of the woods and may extend the correction to the October 10 low at $1.25.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
(The technical analysis of this story was written with the help of an AI tool.)
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