Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
The first half of 2021 has been quite eventful for the global cryptocurrency market. The new year kicked off with a rising Bitcoin that eventually snapped an ATH of above $60,000 in mid-May. Naturally, the move provided an impetus for almost all altcoins as they benefited from rising bullish sentiment.
However, the 19 May crypto-crash severely hampered the overall market structure and there were no clear signs of a bullish reversal just yet. In the middle of all this, XRP’s rise and fall have been quite interesting. The cryptocurrency entered 2021 on the back of Ripple’s impending lawsuit with the U.S. SEC but still saw higher levels over the next few months.
What was even more impressive is that its correlation with Bitcoin was just 0.38-0.20 through January-April, figures which meant that its gains were largely independent of Bitcoin’s movement. This correlation coefficient has now been bumped up to 0.80 as wider bearish sentiment eventually spilled over into the XRP market as well.
At the time of writing, XRP was being traded at $0.524, down by 8% over the last 24 hours.
XRP Daily Chart
XRP has flashed constant bearish signals since its 33% plummet on 19 May. Constant selling pressure dragged its price below the 200-SMA (green) in late June for the first time since the lawsuit was announced in late December. In fact, a death cross was also spotted on its daily chart – A development that underlined severe bearish conditions in the market.
The alt’s price is now close to its 22 June low of $0.509 and it remains vulnerable to a breakdown over the coming days. The Visible Range showed high interest for XRP between $0.458-$0.430 and could be XRP’s next destination in case of an extended decline. Meanwhile, an immediate bullish response is needed at $0.509 to invalidate such an outcome.
The Relative Strength Index highlighted oversold conditions in the market. The index touched this zone in late June, a development that triggered a near 40% surge in value and bulls would be aiming at a similar outcome.
However, with selling pressure still high in the broader market, a trend reversal is still an uncertainty. The Directional Movement Index’s -DI drifted further away from the +DI as selling pressure was on the up. The was also confirmed by the Aroon indicator as the Aroon up held close to 0% while Aroon down was at 100%. This also indicated a new low for the digital asset over the last 25 periods of trade.
XRP remained exposed to another 15%-16% decline in value if bulls fail to stop losses at $0.509. An immediate response would be required by the bulls at XRP’s press time support of $0.509 to negate the chances of such an outcome. Meanwhile, traders can opt to set up short trades once this critical defense is breached.