Ripple (XRP) price fell from $0.63 to $0.52 earlier this week due to a new regulatory battle with the US SEC. However, traders in the derivatives market are holding positions in anticipation of a rebound in altcoins and appear to believe this is a temporary setback rather than a long-term barrier.
Whether it’s true or false, this analysis explores the reasons behind this sentiment and what could happen next for XRP.
Ripple bulls hope for light at the end of the tunnel
On Wednesday, the US SEC filed an appeal challenging the unsafe status of XRP declared by the court in July 2023. Immediately after the announcement, XRP’s price fell, wiping out a significant portion of its recent gains.
While traders initially panicked and opted to short the token, data from Coinglass now shows that the situation has changed. According to the derivatives information portal, XRP’s long/short ratio rose to 2.10.
This ratio indicates whether there are more traders holding long positions than short positions. A reading of less than 1 means more traders are choosing to sell short, suggesting bearish sentiment. On the other hand, a reading greater than 1 indicates a prevailing long position.
Read more: XRP ETF explained: What it is and how it works
Ripple long/short ratio. Source: Coinglass
In the case of XRP, 67.75% of traders are taking long positions and 32.25% are choosing short positions. This suggests that the majority of traders expect XRP’s value to rise once the controversy surrounding the SEC appeal subsides.
Additionally, liquidation heatmaps that identify areas of high liquidity appear to be consistent with the bias. In other words, the liquidation heatmap shows the price levels at which large liquidations are likely to occur.
It also helps traders find optimal liquidity positions. Specifically, if the color changes from purple to yellow, liquidity is concentrated at that time and the price may move in that direction. For XRP, these regions are between $0.62 and $0.63. As such, altcoin values may rebound towards those levels soon.
Ripple liquidation heatmap. Source: Coinglass
XRP Price Prediction: Oversold and ready for a rebound
Looking at the Bollinger Bands (BB) on the daily chart, we can see that the volatility around XRP is increasing as the bands widen. However, BB not only highlights the level of volatility, but also indicates whether the token is overbought or oversold.
When the upper band of BB touches the price, it is overbought. Conversely, if the lower band taps the price, it is oversold. As seen below, the lower band of the indicator reaches the XRP price at $0.52.
This shows that slight buying pressure can be an important factor in causing a pullback. Additionally, the altcoin’s price is co-located with the 38.2% Fibonacci retracement level. This ratio, also known as the support floor, could also be important in helping XRP recover.
Read more: How to buy XRP and everything you need to know
Ripple daily price analysis. Source: TradingView
Therefore, there is a high chance that XRP price will break above the $0.58 resistance. If that happens, the altcoin price could jump to $0.62. However, this prediction could be invalidated if the SEC’s appeal proceeds with Ripple in a losing position. In that case, the price of XRP could drop to $0.48.
Disclaimer
In accordance with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. Although BeInCrypto strives for accurate and unbiased reporting, market conditions are subject to change without notice. Always do your own research and consult a professional before making any financial decisions. Please note that our Terms of Use, Privacy Policy, and Disclaimer have been updated.
