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Will XRP Revert to $0.56? Check out the altcoin
- The token was oversold, suggesting a northward reversal.
- DAA fell more than the price of XRP, indicating that $0.50 could be a good entry.
XRP, the native token of the XRP Ledger, became oversold on May 12. This was the signal indicated by the Relative Strength Index (RSI) on the 4-hour chart.
The RSI is a technical indicator that shows whether a cryptocurrency’s momentum is bullish or bearish. Reading at 70 and above suggests a token is overbought.
The door is open for buyers
However, when the RSI is at or below 30, it means that the asset is oversold.
On this data the indicator fell to 30.09 before press time reading of 35.65, from which it can be deduced that a significant rebound could be underway.
The last time XRP found itself in such a situation, the price increased. Days later, the token’s value hit $0.56 before another retracement.
Therefore, if the pattern comes to life again, the price of XRP could approach the price mentioned above.
Source: Santimento
But momentum alone cannot determine the next price direction. Accordingly, AMBCrypto evaluated other parameters. The first on-chain parameter considered was the price-DAA divergence.
DAA stands for Daily Active Addresses and tracks the level of user interaction on the network. With price-DAA divergence, traders can find entry and exit points.
For the uninitiated, this indicator is extremely valuable. This is why higher prices it can attract more people to buy XRP, thus leading to an increase in network activity.
But in most cases, when this happens, prices reach a local maximum. On the other hand, an unusual increase in active addresses could force the token price to grow.
XRP doesn’t need BTC this time
Therefore, if the price rises more than the DAA, it could be a buy signal. On the other hand, a situation where the price falls more than the DAA is solid exit signal.
At the time of writing, the cryptocurrency’s DAA price was -58.28%, indicating that activity on the XRP Ledger has been insignificant.
Although XRP has lost 14.66% of its value in the last 30 days, the decrease in active addresses has been greater.
Source: Santimento
Therefore, buying XRP at $0.50 might be a good idea. Furthermore, $0.56 seems like a possible short-term target. But this may not necessarily depend on That of Bitcoin [BTC] movement.
As of this writing, BTC correlation coefficient with XRP it was 0.56. The correlation coefficient values vary between -1 and +1 where the former indicates a divergence while the latter indicates a strong similar movement.
Realistic or not, that’s it The market capitalization of XRP in terms of BTC
Therefore, XRP’s correlation with the number one cryptocurrency by market capitalization was weak.
Therefore, if the price of Bitcoin does not move northward, this may not stop XRP from rising in the direction of $0.56. However, traders should not rely on these indicators alone.