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Analysis

XRP could revisit $0.40 next month as correlation with Bitcoin increases

Manu Naik

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XRP
Source: Unsplash

XRP performance marked nearly 90% gains since the start of the year. However, the bridge currency hasn’t touched the $0.40 level since July last year, though that might be about to change this alt-season. CoinMarketCap shows the coin has a market capitalization of nearly $13.5 billion, with over $4 billion worth of XRP traded in the last 24 hours.

XRP 1-day chart

XRP

Source: XRPUSD on TradingView

Recently, XRP dropped from above the $0.35 mark down to $0.30 in one day, suggesting a corrective movement before further upward movement. This is supported by the positions of the 50 and 200-day moving averages, which despite moving through a death cross since mid-August last year, looked poised to re-position into a golden cross.

This could signify some sideways or slight downward movement to the 61.8% Fibonacci retracement level support until the two MAs meet in the next week or so.

The ‘squeeze momentum’ indicator, assumes that price compression leads to price expansions, presented high bullish momentum, though it looked to be falling after the recent corrective move. However, the mid-line dots had not changed color, meaning this corrective move was not an overall defining movement.

The positive directional index (+DI, green) was also moving above the negative directional index (-DI, red), which is a typical sign of a rising bullish trend. The average directional index (ADX, white) was also on the rise, adding weight to the uptrend seen since the start of the year.

Following a potential corrective move to the 61.8% Fibonacci retracement line, XRP is likely to move up to the $0.40 mark, at the next high-volume node, during the first week of March under the influence of the predicted golden cross.

Correlation with Bitcoin

XRP

Source: CoinMetrics

According to CoinMetrics, XRP correlation with Bitcoin has been rising since mid-January, when BTC crossed over $9000 for the first time in months. Bitcoin is expected to move upward in the coming weeks, and though XRP correlation is still lower now than its values at the start of the year, the relatively high positive correlation could indicate that it will move up alongside BTC in the weeks to come.

Conclusion

The potential for a golden cross in the next week or so seems to be quite high. Considering how strongly the directional indices are predicting upward movement, coupled with rising XRP correlation with Bitcoin further strengthens the possibility of a short to medium-term price appreciation.

XRP will likely rise to the $0.40 level by the first week of March, following a brief corrective move to the 61.8% Fibonacci retracement line.

Manu is a full-time journalist at AMBCrypto covering the US and Indian markets. A graduate in engineering, he writes mainly about regulations and its impact with a focus on technological advancements in the crypto space.

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