XRP (XRP) risked a further decline below $1 as its bearish technical setup coincided with increased inflows into exchanges.
Key takeaways:
XRP faces overall resistance at $1.42
XRP’s 13% rise to $1.43 between Saturday and Sunday hit a wall of resistance at $1.39-$1.43, sending it back to its current price of $1.34.
Cost-based distribution heat map can be seen that there is a gigantic concentration of supply in this area, with almost 1.48 billion XRP purchased in the last 30 days. This marks an area of stiff resistance for XRP, limiting its upside potential.
The daily XRP price chart below shows that this area coincides with the upper trend line of the symmetrical triangle that has been suppressing the price since February 1st.
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The XRP/USD pair is trading below the lower triangle trend line at $1.35. A daily candle below this level would confirm the symmetrical triangle, opening the way for a deeper correction.
The measured target of the dominant chart pattern, calculated by adding the height of the triangle to the breakout point, is $0.95, which is approximately 29% below the current level.
As Cointelegraph reports, a breakout and closing below the lower boundary of the descending channel at $1.20 poses a risk of breaking the February 6 low of $1.11. XRP may then fall to psychological support at $1.
The BitGuru analyst commented on the support level at $1.20-$1.22, saying:
“If this base holds and buyers step in, a rebound toward $1.80-$2.20 could occur quickly, signaling the beginning of an economic recovery.”
Meanwhile, the two-day chart also shows a decline to $0.80, driven by whale selling.
The supply of XRP on exchanges is increasing
According to data resource CryptoQuant, over 472 million XRP worth approximately $652 million was transferred to Binance over the past week, marking the largest inflow to the exchanges in February.
Transferring tokens to exchanges often signals a potential desire to sell or at least place liquidity closer to the market.
“Such inflows typically reflect a more defensive stance from investors holding XRP,” CryptoQuant Darkfost analyst he said in Monday’s QuickTake note, adding:
“Recording the volume of such flows could create conditions for a sudden wave of selling pressure that could impact price action in the short term.”
As a result, the XRP balance on Binance increased to 2.73 billion tokens from 2.55 billion in mid-February. This represents a total boost of approximately 180 million (+7%) in less than three weeks.
Increasing supply of XRP on exchanges is a classic bearish signal that could outpace demand, increasing selling pressure.
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