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Ripple (XRP) update impact limited by strong Bitcoin correlation

Ripple (XRP) update impact limited by strong Bitcoin correlation

GrafaGrafa2024/09/05 01:25
By:Mahathir Bayena

Ripple's (CRYPTO:XRP) XRP has seen a muted reaction to significant developments within its ecosystem, mainly due to its strong correlation with Bitcoin (CRYPTO:BTC). 

Despite the announcement of new smart contracts for the XRP Ledger (XRPL), which could have been expected to boost the token’s price, XRP has continued to struggle, dropping by 3% in recent days. 

XRP’s performance has remained stagnant over the past two months, even with several potentially price-positive events. 

For example, in July, reports surfaced that former U.S. President Donald Trump raised over $4 million in campaign donations through digital tokens, including XRP. 

Similarly, a transfer of 33 million XRP tokens to a Binance wallet on August 22 went unnoticed by the market. 

Most recently, Ripple's announcement to integrate smart contracts into XRPL failed to ignite any upward momentum, as the strong correlation between XRP and Bitcoin has overshadowed these developments. 

Currently, the correlation coefficient between XRP and Bitcoin stands at 0.72, indicating a substantial positive relationship between their price movements. 

Bitcoin's 4% decline over the past 24 hours has been mirrored by a 3% drop in XRP’s price. 

Although trading volume for XRP surged by 39%, this increase created a negative divergence, often seen as a sign of rising selling pressure. 

The price-to-daily active address divergence, a metric that compares price changes with the number of daily active addresses, shows a value of -63.81 for XRP, reinforcing the notion of increased selling activity. 

The Moving Average Convergence Divergence (MACD) line for XRP is below its signal line and the zero line, indicating a bearish trend that might persist unless there is a significant reversal. 

This suggests traders may either avoid entering the market or consider taking short positions. 

XRP's current situation is further emphasised by the Elder-Ray Index, which measures bull and bear power in the market. 

The index stands at -0.035, remaining negative since August 26, showing that sellers currently dominate. 

If the bearish momentum continues, XRP could see a drop to $0.52. 

Failing to hold this support level might lead to a further decline toward $0.46. 

However, if the market sentiment turns bullish, XRP could rise to $0.56. 

The coming days will be crucial in determining whether XRP can break free from its correlation with Bitcoin and capitalise on its ecosystem updates or face continued downward pressure.

At the time of reporting, the XRP price was $0.5584, and the Bitcoin (BTC) price was $58,050.12.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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