XRP price braves growing headwinds as Ripple holders expect short-term buying pressure


Share:
  • XRP price could recover further this week with the break above the descending channel. 
  • Ripple CTO David Schwartz says an AMM will turn XRP price volatility into yield.
  • Schwartz explains that the XRPLedger based market maker will harvest volatility, promoting buying pressure during price decrease.

Ripple XRP price began recovery this week. A leading catalyst driving the altcoin’s price recovery is the anticipation of an increase in buying pressure on the altcoin, XRP, with the Automated Market Maker (AMM) that is set to go live on the XRPLedger.

Ripple CTO, David Schwartz, expects a short-term increase in buying pressure on XRP, following the launch of AMM. 

Also read: Gary Gensler is a hammer and everything looks like a nail: Ripple CEO Brad Garlinghouse

XRP price likely to experience buying pressure from holders

Ripple released a new version of the XRPLedger (XRPL) early on Wednesday. The version, 1.12.0, has been released and all XRPL server operators are set to upgrade to the latest version to vote for amendments. 

David Schwartz recently commented on an AMM going live on the XRPL, informing his 463,300 followers on X that he expects a short-term increase in buying pressure on the altcoin. An XRP community member shared his concerns on the likely decline in the altcoin’s price in the rebalancing of the AMM’s pools.

Schwartz addressed the concern and explained that the AMM is likely to draw mainly from XRP holders. This could mean a short-term net increase in selling pressure. However, ideally, as AMM harvests yield, buying pressure could increase during price decreases.

In theory, an AMM should reduce volatility by selling into price increases and buying during price decreases, allowing for yield harvesting. 

XRP price recovers this week

XRP price is facing headwinds in its recovery this week. Lockridge Okoth, crypto analyst at FXStreet, noted that XRP price successfully broke above a bearish falling channel. If XRP price continues to hold above this channel, it could flip the $0.4600 level into support.

XRP/USDT 1-day price chart on Binance

XRP/USDT 1-day price chart on Binance

Ripple price faces resistances at the 200-, 100-, and 50-day SMAs acting as resistance levels to cap the upside potential for XRP at $0.5107, $0.5666, and $0.5753,respectively. A decisive break below the midline of the channel at $0.4191 would invalidate the bullish outlook for XRP bulls.

Cryptocurrency metrics FAQs

What is circulating supply?

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.

What is market capitalization?

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.

What is trading volume?

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.

What is funding rate?

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.


Like this article? Help us with some feedback by answering this survey:



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

Bitcoin tags $60,000 for the first time in more than two years

Bitcoin tags $60,000 for the first time in more than two years

Bitcoin hit $60,000 after more than two years below this level. BTC liquidations have surpassed $277 million in the last 24 hours. This massive rally in the pioneer cryptocurrency could be attributed to the spot ETF approval.

More Bitcoin News

Arbitrum price resumes rally with Web3 gameathon plan for March

Arbitrum price resumes rally with Web3 gameathon plan for March

Arbitrum, an Ethereum Layer 2 scaling solution, has announced an event for Web3 gaming. The event is likely to attract community members, delegates and Web3 gamers. This could positively influence Arbitrum adoption and is likely to boost ARB gains. 

More Arbitrum News

Ethereum price hits new yearly high at $3,369 as staked Ether rises to 26%

Ethereum price hits new yearly high at $3,369 as staked Ether rises to 26%

Ethereum price has climbed to a new 2024 high of $3,369 on Wednesday. Bitcoin’s rally to $59,000 and the upcoming Dencun upgrade activation on mainnet have likely catalyzed Ethereum’s price gains. 

More Ethereum News

XRP climbs to $0.58 as SEC pushes for deadline extension in Ripple lawsuit

XRP climbs to $0.58 as SEC pushes for deadline extension in Ripple lawsuit

XRP price rallied on Wednesday in response to the Securities and Exchange Commission’s (SEC) push to delay the remedies briefing deadline in its lawsuit against the payment remittance firm. 

More Ripple News

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin price has formed a potential top signal that forecasts a sell-off. The weekly chart also points to a bearish divergence, which adds credence to the bearish outlook. Investors can expect BTC to consolidate between the $52,062 to $45,160 levels.

Read full analysis

BTC

ETH

XRP