XRP could drop to 2520 sats amid rising Bitcoin dominance
Other than a brief rise to nearly 2900 sats on January 6, XRP has been mostly consolidating between 2550 and 2700 sats since mid-December, 2019. With Bitcoin and its dominance on the rise, XRP could be in for some sharp movements in the short-term.
XRP BTC 4-hour chart
The 4-hour chart for XRP/BTC shows the coin in an ascending channel formation, similar to the one which took place in late-December last year. The downward breakout from that channel had been followed by some sideways movement before settling back into another ascending channel, and this could happen again.
The price failed to breach the 50-moving average, which is likely to provide further resistance in the near future. A rise to the channel mid-point seems plausible, however, a downward breakout to the 2524 sats looks likely. This could be followed by some sideways movement, eventually breaking into a bullish movement as we saw occur with the December channel, up to the 2700 sats level.
After a brief dip down to 68.8% between the 5th and 7th of January, Bitcoin’s dominance soared to almost 71% on January 8. Since then, dominance has dipped to around 69.6%, but is still going strong, and looks to be rising.
A rising Bitcoin dominance usually signifies market participants are liquidating altcoins into Bitcoin during a bullish market. Since Bitcoin is projected to go up in the coming weeks, it makes sense that many investors would want to swap their XRP for the more likely profitable BTC at this point in time.
XRP correlation with Bitcoin
CoinMetrics’ data on BTC and XRP correlation showed that it is at its lowest point since December 2018. This might not necessarily be a bad thing since Bitcoin is projected to go up, the lowering correlation could mean that XRP won’t perform as well. However, despite a decrease over the last year, correlation stands at nearly 0.70, which is still a relatively high, positive correlation.
With Bitcoin dominance high and rising, it seems likely that XRP investors will want to exchange their coins into BTC, considering its projected upward movements. Also, as correlation is relatively lower, the upward movement of Bitcoin might not be as effective for XRP, though this is probably a less important factor in the scheme of things.
It seems likely that XRP will copy the pattern exhibited a month earlier, and break down from the channel boundaries into some sideways movement at the 2524 sats level. This could possibly be followed by an upward movement to the 2700 sats level, or around $0.216 at the time of writing, in the coming weeks.