XRP: My Crypto Pick of the Month... or the Month I Lose All My Money
Starting today, I will be selecting one cryptocurrency per month to be the "Coin of the Month." I will use metrics from Sanbase and some Technical Analysis (TA) to analyze the coin, and then revisit its price performance after one month to see how it has changed. This will be a fun and educational way for me to learn more about the price behavior and gain insights into the various factors that can influence a coin's price.
The price of XRP has mostly been fluctuating between $0.28 and $0.54 for the past six months. It has also been in a downward trend since 2021, but it is part of a larger upward trend that could potentially complete a triangle formation. Right now, the price is at the bottom of this triangle, which some investors may see as a good opportunity with potential for both low risk and high reward.
Over the past six months, the group of XRP holders who own between 1 million and 10 million XRP has increased their holdings by 25%, bringing the total to 4.09 billion XRP. This level of accumulation is often seen at market bottoms. Additionally, this group of holders typically has a significant influence on the price of XRP, with the exception of the FUD event in December 2020.
The funding rate for XRP on Binance is currently slightly negative, which suggests that there is a bearish sentiment among traders. However, it's important to note that retail traders on Binance may not accurately predict the short-term price movements of an asset.
According to the MVRV 30 day for XRP, which measures the profit or loss of short-term traders, these traders are currently experiencing average losses of -7%. As a result, they may be hesitant to sell their coins at a loss, which could potentially lead to an increase in the price of XRP.
If the MVRV Long/Short difference (which measures the difference between the average profit or loss of long-term holders versus short-term holders) is trending upwards while the price is remaining relatively sideways, it could indicate that long-term holders are becoming more confident and are increasing their positions. This could potentially lead to an increase in price in the future, as long-term holders are often seen as more "stable" investors who are less likely to sell their positions based on short-term price fluctuations. This is the case of XRP in the last few months.
According to the Weighted Sentiment metric, the overall sentiment towards XRP has been negative over the past two months. However, despite this negative sentiment, the price of XRP has not decreased. This could potentially be a sign that sellers are "exhausted," meaning that there are fewer and fewer sellers willing to sell at current prices. In these situations, the price of an asset can sometimes go against the sentiment of retail traders, meaning that it could increase even though there is a bearish sentiment.
After analyzing XRP using various metrics and technical analysis, I've determined that investing in XRP is kind of like a game of roulette. The price has been pretty stagnant for the past six months, and most retail traders on Binance seem bearish on XRP. However, long-term holders seem confident, and short-term traders might be hesitant to sell, so who knows what could happen? Maybe XRP will be the next big thing, or maybe it'll crash and burn. It's worth considering as an investment for January, but don't bet your life savings on it. That would be pretty risky!
Happy New Year!
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