Mapping XRP’s probable road to $1 in the near term
XRP’s price bounced into a crucial support level for the third time yesterday, solidifying its consolidation phase. Taken singularly, this accumulation might not seem impressive. However, when combined with its latest price action, it has the characteristics of a fractal.
A fractal and its implications
XRP’s price entered an accumulation phase from 21 January to 5 February, a period during which the asset moved sideways with little to no volatility. During this period, the volume seemed to decline and dip well below the 100 moving average.
As dull as this phase was, a breakout from it resulted in a 40% ascent to $0.915. Since this swing high, the altcoin has retraced by roughly 17% and set up a four-hour demand zone, extending from $0.746 to $0.777.
Its price has tagged this barrier thrice since its creation, suggesting that this is another accumulation zone. Interestingly, the volume has also declined like it did the first time around, indicating that this is a fractal in play.
Therefore, investors can position themselves to capitalize on the breakout move that emerges from this consolidation. Like the previous move, XRP’s price is likely to explode and slice through the immediate resistance barrier at $0.914 and make its way to the $1-psychological level.
More to back up bullish thesis?
Supporting this bullish outlook is the 365-day Market Value to Realized Value (MVRV). At the time of writing, this metric was hovering around 14%, suggesting that many of its short-term holders that purchased XRP over the past year are selling at a loss.
Since this on-chain index is used to determine the average profit/loss of investors, it can be used to ascertain that this is an opportunity zone where long-term holders are likely to accumulate XRP tokens at a discount.
Hence, this index lends credence to the bullish thesis obtained from a technical perspective.
Now, the technicals and on-chain metrics have no loopholes per se. Even so, a potential spike in selling pressure affected by the large-scale crash in Bitcoin could sway the optimism.
A four-hour candlestick close below $0.746 will create a lower low and indicate that XRP is likely to move lower and retest the $0.687 support level. Here, sidelined buyers can accumulate XRP at a deep discount, giving the uptrend another go.
Moreover, the area from $0.687 to $0.651 is a stable support level. Ergo, a further dip below this zone seems unlikely. Therefore, the uptrend emerging here could be the key to retesting the $1 psychological level.