Over the past week, Ripple’s XRP witnessed an 11% increase in value, partially driven by Grayscale’s decision to incorporate an XRP Trust into its range of cryptocurrency offerings.
Despite this positive momentum, XRP is approaching a critical supply zone near $0.60 in the third quarter, historically known to attract significant profit-taking activities, particularly from large investors. How will this affect XRP’s price trajectory moving forward?
Impact of the Supply Zone on XRP Price Prediction
XRP has exhibited a distinct price pattern in the third quarter. Noteworthy is the strong recovery witnessed in July and the legal win against the SEC in August, both culminating near the $0.60 supply zone. This marks $0.60 as a pivotal price level to monitor, especially during periods of price appreciation.
As of the present, the ongoing uptrend is approaching the supply zone. If history repeats itself and a price rejection transpires, XRP could retreat to the $0.54 support level.
In the event of such a scenario, shorting XRP could potentially yield profits, particularly if the broader market sentiment cools down ahead of the Federal Open Market Committee (FOMC) meeting.
Nevertheless, with optimistic sentiments surrounding potential Federal Reserve rate cuts, re-entering the market might be prudent only if XRP successfully converts the supply zone into a supportive base.
Furthermore, the Relative Strength Index (RSI) indicates room for the current uptrend, while the stochastic RSI suggests overbought conditions, underlining the importance of monitoring the supply zone closely.
Exchange Dynamics Reflect Diminished Selling Pressure
Last week’s XRP resurgence also saw a decline in sell pressure across centralized exchanges, evident from a significant decrease in exchange inflows.
For instance, on Binance, XRP’s inflow plummeted from nearly 1.8 billion tokens on September 8th to around 50.9 million tokens presently. This reduction in supply pressure has supported the recent uptrend.
Nevertheless, a price surge to $0.60 might entice another round of profit-taking by large entities if historical patterns persist. Whales initiated profit-taking in August when XRP approached the $0.60 supply zone, as evidenced by spikes in Whale-to-Exchange Flow.
If this trend recurs and whales engage in sell-offs once more at this level, XRP’s push above the supply zone could face obstacles. In such a scenario, speculators could seek re-entry points at the $0.54 or $0.50 support levels.
However, a bearish scenario could be invalidated if risk markets experience a robust rally subsequent to the FOMC meeting.